Published: Sat, November 03, 2018
Money | By Wilma Wheeler

Oil Prices Leap After 3 Days Of Sliding

Oil Prices Leap After 3 Days Of Sliding

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. Prices capped this week's loss on signs of a possible trade agreement between the US and China.

The U.S. surpassed Russian Federation in August to claim the title of world's top oil producer, with the largest year-on-year output increase in U.S. history.

A list of all countries getting US waivers allowing them to import Iranian oil is expected to be released officially on Monday, industry sources say. "But rising production from Saudi Arabia and others, coupled with a global equity rout and concerns over economic outlook, is weighing on prices", Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo.

Oil prices climbed for the first time in three days on Wednesday, rising around 1 percent ahead of the start of USA sanctions against Iran next week and as stock markets clawed back some of the losses they racked up this month.

The WTI is likely to stay bearish below $67.25 to target $66.

US production hit an all-time high of 11.3 Mmbpd in August, according to the Energy Information Administration's first reading of monthly data released Thursday. Gasoline inventories decreased by 3.5 million barrels and distillate stockpiles dropped by about 3.1 million barrels.

The increase in Opec production "has really started to tamp down concerns surrounding the loss of Iranian barrels", Tradition's McGillian said.

Benchmark Brent crude now trades above $80 a barrel. But the spread would narrow to 4 dollars per barrel by December 2019. "Technically the market has been in a weak position", said Phil Flynn, analyst at Price Futures Group in Chicago.

Brent crude futures had gained 49 cents, or 0.7 percent, to $76.40 a barrel by 0619 GMT.

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

"In theory, we could have been in a bullish market because of sanctions against Iran".

At the same time, oil has also been caught in the global market slump, fueled by a trade fight between the world's two largest economic super powers.

However, U.S. equities rebounded strongly on Thursday, with the Nasdaq Composite Index jumping about 3 percent in late trading, soothing anxious investors to some extent. In October, the 12 OPEC members bound by the supply limiting agreement lowered compliance to 107 percent as production rose, from a revised 122 percent in September, the survey found. US WTI crude, meanwhile, was 0.49% at $63.38 per barrel.

Brent, against which Nigeria's oil is priced, had early this month hit a new four-year high of $86.74 per barrel, fuelled by concerns about a shortfall in global supply as USA sanctions whittle away at Iranian crude exports. Of the 220.4 million tonnes of crude oil imported by India in 2017-18, about 9.4 per cent came from Iran.

That will offset the decline in Iranian exports that could tighten supply.

Fears of oversupply from the world's major oil producers cast a pall over the market.

"The trade is looking for a crude oil inventory build".

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