Published: Fri, September 14, 2018
Economy | By

Oil slips from four-month highs on economic concerns

Oil slips from four-month highs on economic concerns

US crude futures rose 61 cents to $69.86 a barrel.

The US crude production is expected to rise 840,000 bpd to 11.5 million bpd next year, lower than a previous expectation for a rise of 1.02 million bpd to 11.7 million bpd, the US Energy Information Administration said in a monthly report.

Traders said this pulled wide open the discount of U.S. WTI crude versus Brent to around $10 per barrel, the biggest since June.

"Things are tightening up", the agency said in its monthly report, but added: "As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the USA dollar raising the cost of imported energy".

US sanctions on Iran's energy industry, which come into force in November, have already cut supply back to two-year lows, while falling Venezuelan output and unplanned outages elsewhere will also keep the balance between supply and demand tight, the IEA said.

U.S. Energy Secretary Rick Perry praised members of the Organization of the Petroleum Exporting Countries and Russian Federation for their work in preventing a spike in oil prices during a visit to Moscow.

"Oil cut earlier losses and rose towards its highest level this year on Wednesday, after a drop in US crude inventories and as the prospect of the loss of Iranian supply added to concerns over the delicate balance between consumption and production".

Oil markets are also watching Hurricane Florence offshore the United States, amid surging demand for gasoline and diesel, although crude output will not be affected on the storm's current route, according to CNBC.


U.S. West Texas Intermediate (WTI) crude futures were at $67.70 per barrel at 0637 GMT, up 65 cents, or 0.2 percent from their last settlement. "Russia has the potential to raise production by 300,000 barrels (per day) mid-term, in addition to the level of October 2016", he said.

Total OPEC crude oil production averaged 32.56 million bpd in August, an increase of 278,000 bpd over the previous month, according to secondary sources.

Demand from nations not in the OECD group of industrialized countries, led by China and India, is expected to rise by 1.1 million bpd to 51.6 million bpd this year and by 1.2 million bpd to 52.8 million bpd next year, the IEA said.

"Going forward, economic uncertainty, and hence questions surrounding global oil demand, coupled with geopolitical tensions, will need to be factored into maintaining a balanced market in the months to come", the report said.

A six-country monitoring committee overseeing the OPEC/non-OPEC supply accord will meet September 23 in Algiers to assess market fundamentals and potentially make output policy recommendations.

But it said rising demand could also be checked.

Although the EIA does not publish crude production forecasts for Russia and Saudi Arabia in its short term outlook, it expects that US output will continue to exceed Russian and Saudi production for the remaining months of 2018 and through 2019.

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