Oil holds losses as crude stockpiles soar

Cornelia Mascio
Ottobre 13, 2018

Oil prices have slumped to more than two-week lows as global stock markets fall, with investor sentiment made more bearish by a bigger-than-expected build in U.S. crude inventories.

Brent crude futures had risen $1.02 cents, or 1.3 percent, to $81.28 a barrel by 0637 GMT.

Crude supply is also a concern in the Middle East. Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of USA sanctions that take effect on November 4.

Wednesday's cuts represent about 6.5 percent of the nation's daily output of 11.1 million barrels of crude.

"The U.S. government's tough stance raised the stakes for a more significant Iran export loss than previously foreseen", said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer. "The large increase in overall crude oil inventories and a decent-sized increase at the Cushing, Oklahoma, delivery hub is a negative for prices, as it eases some of the supply crunch worries that have crept into the market", said John Kilduff, a partner at Again Capital Management in NY. Total oil demand for the year is now pegged at 98.79 mb/d.

The monthly report from the Organization of the Petroleum Exporting Countries showed the 15-nation producer group's output rose by 132,000 bpd in September to almost 32.8 million bpd.

BP is reportedly planning on a cycle of oil prices at $60 to $65 per barrel: "We've been through this period of really low prices and they're up again and we can't plan on these high prices right now", Dudley explained.

If forecasts prove accurate, the hurricane would largely miss major oil-producing assets, analysts said, but a change of track could widen the impact.

Iran has questioned whether the market needs more oil and says its output is holding steady at about 3.8 million bpd.

Before the re-imposition of US sanctions, Iran was India's third-largest oil supplier behind Saudi Arabia and Iraq.

The South Asian nation was hoping to lift significantly higher volumes in the current fiscal year, after Tehran offered a discount on shipping and an extended credit period, before the US decision on sanctions changed its plans.

Recently, Brent crude futures were dropped by more than 1% in Asia as stated by a survey of S&P Global Platts.

The OPEC expects non-OPEC oil supply growth to increase by 200,000 barrels per day in 2018, driven mostly by US, Canada, Kazakhstan and Brazil, according to the organization's report.

Money managers cut their net long U.S. crude futures and options positions in the week to October 9, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The International Monetary Fund cut its global economic growth forecasts for 2018 and 2019 on Tuesday, raising concerns that demand for oil may also slump.

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