Oil dives 3% on demand worries even as OPEC, allies extend cuts

NEW YORK (Reuters) – Oil prices fell more than 3% on Tuesday, even after OPEC and allies including Russia agreed to extend supply cuts until next March, as weak manufacturing data had investors worried that a slowing global economy could dent oil demand. The Organization of the Petroleum Exporting Countries and other producers such as Russia, a group known as OPEC+, agreed on Tuesday to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices. The extension comes after Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to prolong the pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand. “There seems to be some disappointment that OPEC didn’t make a larger production cut. Or a sense that demand is really bad,” said Phil Flynn, analyst at Price Futures Group in Chicago. Signs of a global economic slowdown, which could hit oil demand growth, means OPEC and its allies could face an uphill battle to shore up prices by reining in supply. “It was the bare minimum OPEC could agree on in order to prevent a major meltdown in prices. Member countries noted that global oil demand growth for this year has fallen to 1.14 mbpd (million barrels per day) whilst non-OPEC supply is expected to grow by 2.14 mbpd,” PVM analyst Tamas Varga wrote in a note. “It appears that the supply side of the oil equation is supportive for oil prices but demand concerns are forcing oil bulls to keep at least part of their gunpowder dry.” The United States and China agreed at the G20 leaders summit to restart trade talks, but factory activity shrank across much of Europe and Asia in June while U.S. manufacturing activity slowed to near a three-year low. Meanwhile, U.S. crude oil stockpiles were seen falling for a third consecutive week, a preliminary Reuters poll showed. Industry data will be released at 4:30 p.m. EDT (2030 GMT), with government data to follow on Wednesday. Nick Bit: They will cut and cut and cut all they need to. AND the global economy is NOT slowing and that will surprise the shit out of the market. Remember this  is a colossal game of giant steps