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Oil slips amid gloomy outlook for demand

Oil prices slipped on Tuesday as manufacturing data from Europe and Japan focused market attention on the gloomy outlook for demand. Meanwhile uncertainty around supply disruptions in Saudi Arabia remains.

Brent crude futures LCOc1 fell 40 cents to $64.37 a barrel by 0624 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 were at $58.31, down 33 cents.

“The demand side of the equation is back in focus,” said Michael McCarthy, senior market analyst at CMC Markets in Sydney, pointing to sluggish manufacturing numbers in leading economies in Europe as well as Japan.

“That’s why we’re seeing a little bit more (downward) pressure on Brent than West Texas at the moment.”

Still, oil prices remained at comparatively elevated levels for the year in the wake of the Sept. 14 attack on Saudi Arabia’s largest oil processing facility that halved output in the world’s top oil exporter.

Reuters reported that Saudi Arabia has restored more than 75% of crude output lost after the attacks on its facilities. While the kingdom has reiterated its commitment to restore output to pre-attack levels by the end of September, some analysts and consultants are skeptical about that target. The Wall Street Journal reported on Monday that repairs at the plants could take months longer than anticipated.

State-run Saudi Aramco reduced refinery run rates by 1 million barrels a day after the attacks to make more crude available for export. The kingdom’s oil inventories are down 8.4% since the strike, according to Orbital Insight.

If Energy Information Administration data Wednesday confirms the expected decline in U.S. crude stockpiles, it would be the fifth weekly draw in six weeks. Inventories rose by 1.1 million barrels to 417.1 million barrels in the week ended Sept. 13, according to the EIA.