Sunday, 26 May, 2019

Oil falls below $70 as United States crude enters 'bear market'

OPEC output cuts likely next year Oil headed for longest losing streak on record after falling into bear market
Ginger Lawrence | 10 November, 2018, 21:21

Benchmark Brent crude oil fell to its lowest since early April, down more than 18 percent since reaching four-year highs at the beginning of October.

Brent crude LCOc1 futures fell 53 cents to $70.12 a barrel, a 0.8 percent loss.

WTI crude CLc1 futures fell 48 cents to $60.19 a barrel, a 0.8 percent loss by 11:24 EST (1624 GMT), after dropping under $60 a barrel to its lowest in eight months.

Brent crude oil sank Friday to a seven-month low under Dollars 70 on surging USA energy stockpiles ahead of a weekend meeting of major oil producing nations.

U.S. West Texas Intermediate crude futures were on track for the 10th straight day of declines, the longest such streak since July 1984, according to Refinitiv data. That put it in "bear market" territory, borrowing a definition used in stock markets.

Supply concerns that drove crude to a four year high last month faded on speculation the USA would soften the blow of its sanctions on Iran to lower pump prices at home.

But other big producers, such as Saudi Arabia, Russia and shale companies in the U.S., have increased output steadily, more than compensating for lost Iranian barrels.

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On Monday, as part of the Trump administration's "maximum pressure campaign" to get Iran to change its behavior, the US reimposed oil and banking sanctions on Iran that were lifted under the 2015 nuclear deal.

In the USA, crude production increased to a record 11.6 million barrels a day last week, according to Energy Information Administration data.

Gas flares burn from pipes aboard an offshore oil platform in the Persian Gulf's Salman Oil Field, operated by the National Iranian Offshore Oil Co, near Lavan island, Iran.

Earlier this week, Iraq's oil minister Thamer Ghadhban said the country plans to increase its oil output and export capacity in 2019, with a focus on the southern oilfields, and is close to reaching a deal with global companies.

"As OPEC exports continue to rise, inventories continue to build which is putting downward pressure on oil prices", analysts at Bernstein Energy said.

The U.S., Saudi Arabia and Russian Federation are all producing at or near record levels while Washington provided exemptions on some of the biggest exporters of Iranian crude, allowing them to continue to purchase in the near term. "A slowdown in the global economy remains the key downside risk to oil". Delegates say OPEC ministers and allies will meet Sunday in Abu Dhabi to discuss scenarios including the option to trim production again next year. Iraq, the Organization of Petroleum Exporting Countries' second biggest producer after Saudi Arabia, has largely rebuilt its energy industry after decades of conflict and sanctions, and has announced ambitious plans to keep expanding its output capacity.