Tuesday, 23 April, 2019

Oil Teeters Near Record Losing Streak After Entering Bear Market

Workers at an onshore Iranian oil facility Workers at an onshore Iranian oil facility
Ginger Lawrence | 09 November, 2018, 13:52

Russian Federation and Germany have slammed the United States' move to reinstate sanctions against Iran's vital oil exports, shipping and banking, saying Moscow and Berlin would continue trade with Tehran. That revived concerns of a supply glut, in contrast to earlier fears over a crude crunch due to shrinking exports from the Persian Gulf state.

The US has also granted waivers to nearly all key clients of Iran's crude oil for fear of further hikes in oil prices.

When asked whether discussions pointed to a return to supply cuts in 2019, a second delegate from OPEC said: "certainly not the other way around".

U.S West Texas Intermediate crude prices were down almost 1 percent to roughly $61 per barrel in midday trading, down about 20 percent from record prices of $76.41 a barrel in early October, and fell as low as $60.83.

Oil prices fell to their lowest level since mid-August yesterday after America granted sanction waivers to top buyers of Iranian oil and Iran said that it had been able to sell as much oil as it needed to. Growing U.S. supplies "add to rising concerns of output", while "the meeting over the weekend between OPEC and Russian Federation may set the tone for the next OPEC meeting in December". The contract fell 1.6 percent to $60.67 on Thursday, and is headed for a 4 percent decline on the week - its fifth consecutive decrease.

That would be about half the daily average China has been importing from Iran since January 2016, trade data showed.

Front-month Brent crude oil futures were down 6 cents at $72.01 a barrel. The global benchmark crude traded at a $9.93 premium to WTI for the same month.

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A return to oil production cuts by the Organisation of Oil Exporting Countries (OPEC) and its allies can not be ruled out next year, a senior OPEC source said yesterday.

In a relief for India, the United States has exempted New Delhi from the imposition of certain sanctions for the development of the strategically-located Chabahar Port in Iran as well as the construction of the railway line connecting it with Afghanistan.

"Iran's situation is better than pre-2016 because of high oil prices and the fact that the USA is isolated this time", the report by Reuters quoted a European diplomat as saying. At the same time, nationwide stockpiles rose 5.8 million barrels last week, compared to a 2-million-barrel gain expected in a Bloomberg survey.

Meanwhile, OPEC's production in October reached the highest level since 2016, and Russian Federation hiked its output last month to a post-Soviet record of 11.4 million barrels a day.

Hinds sees a short-term rally in reaction to a supply deficit in the fourth quarter, but a more significant, sustained boost in oil prices, he says, will require longer-term supply disruption to markets.

Forecasts of a 2019 supply surplus and slowing demand have also dented the market.

"Oil spills and accidents involving tankers are extremely costly". "Even without the exemptions, we will sell our oil".