Published: Sat, October 13, 2018
Economy | By

Oil prices hold ground, but set for 4 percent weekly fall

Oil prices hold ground, but set for 4 percent weekly fall

Analysts argued that the continued drawdowns in oil stockpiles, even though we are past the summer driving season, are a result of increased USA crude oil exports, which have been supported by the widening differential between USA benchmark WTI prices and the global benchmark, Brent crude.

Brent crude futures edged up 13 cents to $80.39 a barrel by 0042 GMT.

U.S. West Texas Intermediate (WTI) crude futures were up 11 cents at $71.08 a barrel, after falling 3 percent in the previous session to the lowest since September 21.

Iranian crude exports dropped down further in the last week, as per an industry source and the tanker data, since customers are looking for alternatives before the start of the US sanctions.

The crude oil inventories of the United States was up 6.0 million barrels for the week ending October 5.

Goldman Sachs reckons US shale oil production can continue to increase by 1 million bpd every year until 2021 at the earliest, according to a new report by the investment bank.

Figures released Thursday by the U.S. Energy Information Administration revealed crude inventories climbed by six million barrels in the week leading up to October 5, compared with analyst expectations for an increase of 2.6 million barrels. India is Iran's top oil client after China.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed.

The International Energy Agency, the West's energy watchdog said in its monthly report that the market looked "adequately supplied for now" and trimmed its forecasts for world oil demand growth this year and next.

Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement (BSEE).

Saudi Arabia and Libya increased output last month by 108,000 bpd and 103,000 bpd respectively, more than offsetting the 150,000-bpd decline from Iran to 3.447 million bpd, as reported by secondary sources.

Several of the world's biggest trading houses expect USA sanctions on Iran to keep oil prices high, with crude staying above $65 and possibly breaking above $100 in the medium term.

Early in the session, crude rose as global equities were set for their biggest daily gain in almost a month. USA light crude CLc1 was down 15 cents at $74.81.

The cartel believed that the slowing economic growth and the increase of the world oil supply, led by the U.S. shale output rise are the reasons of oil demand decrease.

"The enhanced volatility in the market in general is spilling over into energy, as investors are reducing risk", said Rob Thummel, managing director at Tortoise, which manages $16bn (€13.8bn) in energy-related assets.

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