Oil Set for Worst Month in 2 Yrs.

Anna Jefferson
November 3, 2018

In a bearish signal, the American Petroleum Institute reported US crude inventories rose 5.7 million barrels last week, more than analyst's forecasts for a 4.1 million barrel build.

Traders said oil was lifted along with Asian stock markets after a phone call between the United States and Chinese presidents raised hopes that the trade dispute between the world's two biggest economies could be resolved.

"The market is discounting this expectation right now", Thorpe said. President Donald Trump's threat to sanction foreign firms that buy Iranian barrels beyond his November 4 deadline has wiped roughly a third of Iran's oil exports off the market.

Washington has made it clear to Tehran's customers that it expects them to stop buying any Iranian crude oil from that date.

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Traders said prices were weighed down by rising output.

A Reuters survey on Wednesday showed the Organisation of Petroleum Exporting Countries raised oil production last month to its highest since 2016, led with gains by the United Arab Emirates and Libya. The last time this measure exceeded 50k contracts was back in July, just in time for oil to rally from $70 to $86 over the next two months. The rise in USA oil production to an all-time high of 11.2 mln bpd also weighed on global prices of the fuel.

Earlier fears that American sanctions on Iran could result in a crude shortage are also receding, as the USA shale boom gains new momentum and the Trump administration vacillates on how aggressively to target Iranian exports.

The reign as world's biggest oil producer may be short-lived: Russian Federation in September produced 11.37 million barrels a day and they may be above 11.4 million in October. Continuing trade tensions between the US and China are raising concerns slower economic growth will slow the demand for oil.

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Moreover, Saudi Arabia's Energy Minister Khalid al-Falih said on Tuesday that the Organization of the Petroleum Exporting Countries (OPEC) and its partners are in "produce as much as you can" mode.

Four major Asian buyers of Iranian crude imported a total of 1.13 million barrels per day (bpd) from Iran in September, the data released by Reuters showed.

Petoro AS, the company that manages the Norwegian government's massive stake in the country's oil and gas fields, is warning that the industry's costs could be rising for the first time since crude's collapse in 2014. From January 2018 to August 2018, Texas crude oil production increased by 683,000 b/d (15%) and New Mexico production increased by 182,000 b/d (25%).

Financial markets found some support on Tuesday from reports that U.S. President Donald Trump thinks "a great deal" with China is possible on trade.

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