Sunday, 17 February, 2019

Oil prices down more than 1% on rising supply, trade war

Crude Oil Crude Oil
Nellie Chapman | 03 November, 2018, 01:59

Front-month Brent crude futures were at $72.60 per barrel at 0441 GMT on Friday, down 29 cents, or 0.4 percent, from their last close.

In the previous week ending October 19, WTI and Brent lost 3.7 percent and 1.2 percent, respectively, and WTI and Brent settled at 69.12 USA dollars and 79.78 dollars per barrel, respectively, at the end of the week.

The reign as world's biggest oil producer may be short-lived: Russian Federation in September produced 11.37 million barrels a day and they may be above 11.4 million in October. On Tuesday, crude oil futures closed down $0.86, or 1.3%, at $66.18 a barrel.

"The fact that this price weakness is developing just ahead of the official kickoff of the Iranian oil sanctions suggests an amply supplied market in which additional supply was brought to market well in advance of a likely acceleration in Iranian export decline", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

After hitting a multiyear high just one month ago, US light crude has lost almost 20 percent and has shown a pattern that hasn't been seen in some time, according to energy expert John Kilduff.

"We can not end oil imports from Iran at a time when alternatives are costly", noted the Indian government, as quoted by Reuters.

The International Energy Agency (IEA) on Tuesday said high oil prices were hurting consumers and could dent fuel demand at a time of slowing global economic activity.

New York's NYMEХ (New York Merchantile Exchange) is a U.S. futures market founded in 1882.

According to API data, the six-week running tally of crude oil inventory gains equals 27 million barrels.

US crude inventories rose by 3.22 million barrels for a sixth week, the longest streak of gains since March 2017, the Energy Information Administration reported Wednesday. In 2017, the country consumed more than 19 million barrels of crude oil every day.

On Thursday, oil prices rose as investors were encouraged by a strong rebound in the USA stock markets. Grisanti is watching for WTI to break above its 200-day moving average at $67.47 for a rebound.

One might expect the market to be nervous ahead of the impending USA sanctions on Iran, but the oil price dipped this week.

Anticipating a fall in global supply, the Organization of the Petroleum Exporting Countries raised production by 400,000 barrels per day to 33.31 mln bpd in October, the highest since 2016, led by Saudi Arabia, the United Arab Emirates, and Libya, a report by Reuters said. The month of November saw crude oil continue to trade bearish in spot and futures market.

Adequate oil supply and an uncertain global economic outlook also dampened sentiment.

"A lot of folks like to trade crude oil and other commodities to get away from the correlations you have in the stock market", said Kilduff, a CNBC contributor.