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Oil prices fall amid supplied market, Iran sanction exemptions

Reuters  |  SINGAPORE 

By Henning Gloystein

SINGAPORE (Reuters) - prices fell on Wednesday, extending losses from the previous session, with markets well supplied amid rising production and U.S. sanction waivers that allow Iran's biggest customers to continue buying its crude.

Front-month futures were at $71.85 per barrel at 0115 GMT, down 28 cents, or 0.4 percent, from their last close.

U.S. Intermediate (WTI) crude futures were at $61.76 per barrel, down 45 cents, or 0.7 percent, from their last settlement.

The increasingly well supplied market has turned sentiment, which until early October was largely bullish, pushing Brent to four-year highs of more than $86 per barrel ahead of the sanctions.

Brent and WTI have lost 17.4 and 19.7 percent in value respectively from their most recent peaks in early October.

U.S. said "part of the recent sell-off in was due to excessive crude in the physical markets...from elevated production from whilst Iranian supply was still in the market despite reduction in reported exports."

Fawad Razaqzada, at Forex.com, said he had become "quite bearish on oil prices" due to lower demand growth forecasts, higher supply and sanctions waivers.

According to Refinitiv Eikon data, Iranian crude exports have fallen to 1 million barrels per day (bpd) so far in November, down from almost 2 million bpd in October and around 3 million bpd in mid-2018.

U.S. said "have softened (as) supply continues to come in higher-than-expected, particularly from the U.S., Middle East OPEC, and "

Output from the world's top-3 producers Russia, the and Saudi Arabia, broke through 33 million bpd for the first time in October, meaning these three countries alone now meet more than a third of the almost 100 million bpd of global consumption.

Iraq, the second-largest within the Organization of the Exporting Countries (OPEC) behind Saudi Arabia, is targeting production capacity of 5 million bpd in 2019, up from 4.6 million bpd currently, said on Tuesday.

"The market is well supplied, and we see a balanced rather than tight market ahead. This no longer supports our $85 per barrel year-end and 1H19 forecast," said.

Instead, the said it expected Brent to average around $77.5 per barrel to mid-2019.

With production rising, inventories are swelling.

U.S. crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million, data from the American Institute showed on Tuesday.

Despite the well supplied market, Razaqzada warned that it would be "increasingly costly for inefficient producers to maintain output at current levels".

Venezuela's crude production was in "free-fall" and could soon drop below 1 million bpd, the International Agency's warned on Tuesday, down from the more than 2 million bpd it averaged last year.

GRAPHIC: Russian, U.S. & Saudi (https://tmsnrt.rs/2CTwqaq)

GRAPHIC: (https://tmsnrt.rs/2PabBPs)

(Reporting by Henning Gloystein; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, November 07 2018. 07:04 IST
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