By Henning Gloystein
SINGAPORE (Reuters) - Oil 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.
U.S. West Texas Intermediate (WTI) crude futures
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 Iran 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. bank J.P. Morgan said "part of the recent sell-off in oil was due to excessive crude in the physical markets...from elevated production from OPEC whilst Iranian supply was still in the market despite reduction in reported exports."
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.
Output from the world's top-3 producers Russia, the United States 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 producer within the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia, is targeting production capacity of 5 million bpd in 2019, up from 4.6 million bpd currently, Oil Minister Thamer Ghadhban 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," Morgan Stanley said.
Instead, the bank 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 Petroleum 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 Energy Agency's Executive Director Fatih Birol warned on Tuesday, down from the more than 2 million bpd it averaged last year.
GRAPHIC: Russian, U.S. & Saudi crude oil production (https://tmsnrt.rs/2CTwqaq)
(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.)