Oil set for longest losing run since 2014 as supply fears ease

Cornelia Mascio
Novembre 10, 2018

Brent futures for January settlement lost 16 cents to US$70.49 a barrel on the London-based ICE Futures Europe exchange.

The U.S. crude contract had hit a low of $59.26, down $1.41 and off more than 20 percent since its peak in October.

Crude slumped after reaching a four-year high last month as the USA allowed eight countries to continue importing oil from the Persian Gulf state even after it hits the Opec producer with sanctions.

But other big producers, such as Saudi Arabia, Russia and shale companies in the USA, have increased output steadily, more than compensating for lost Iranian barrels.

In the US, crude production increased to a record 11.6 million barrels a day last week, according to Energy Information Administration data.

Inventories in Cushing, Oklahoma, the delivery point for US crude futures, have risen for seven straight weeks amid refinery maintenance and increased pipeline connections into the hub.

On Monday, as part of the Trump administration's "maximum pressure campaign" to get Iran to change its behavior, the USA reimposed oil and banking sanctions on Iran that were lifted under the 2015 nuclear deal. Washington has granted exemptions to Iran's biggest buyers, allowing them to buy limited amounts of oil for at least another six months.

"As OPEC exports continue to rise, inventories continue to build which is putting downward pressure on oil prices", analysts at Bernstein Energy said.

"Certainly, the waivers on United States sanctions for Iranian crude have really accelerated the decline from last month and sensitivity to those issues have been high in recent times", said Daniel Hynes, a Sydney-based senior strategist at Australia & New Zealand Banking Group Ltd.

"A slowdown in the global economy remains the key downside risk to oil", Bernstein added. A Reuters report earlier this week suggested that the OPEC may consider cutting its production at its meeting in Abu Dhabi, scheduled for this Sunday.

Iraq now pumps around 4.6 million barrels per day (bpd) of oil, second only to Saudi Arabia in the Organization of the Petroleum Exporting Countries or OPEC.

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