Oil prices fall into bear market on rising supply

10 November, 2018, 11:55 | Author: Sally Reid
  • Secretary Jeremy Hunt

The sanctions waivers have further eased concerns the oil market will swing into a deficit of crude supplies.

Brent futures for January settlement edged up 9 cents to $70.74 a barrel on the London-based ICE Futures Europe exchange.

Oil's slump has been exacerbated by a USA decision to allow eight countries to continue importing from Iran even after it hits the OPEC member with sanctions. Output from Saudi Arabia, Russia and other crude-exporting nations is on the rise, and analysts generally believe that's in part because the Trump administration asked the Saudis to pump more oil to offset the impact of sanctions on Iran. A collision between an oil tanker and a military frigate off Norway's coast temporarily shut down the nation's largest crude-export terminal, halted the pumping of several North Sea grades, and boosted immediate natural gas prices in the United Kingdom. To put that in context, the BP Statistical Review of World Energy 2018 puts global daily crude production at 92.6 million barrels per day for previous year, so the increase is meaningful.

The sanctions, however, are unlikely to cut as much oil out of the market as initially expected as Washington has granted exemptions to Iran's biggest buyers which will allow them to continue buying limited amounts of crude for at least another six months.

China National Petroleum Corp (CNPC) said on Friday it was continuing to take oil from Iranian oilfields in which it has ownership stakes.

Indonesian Boeing jet crashed after losing key sensor
United Technologies Corp. supplies the angle-of-attack sensors and indicator for the 737 Max, according to Airframers.net. Tjahjono said Flight 610 was intact with its engines running when it slammed into the sea 13 minutes after takeoff.

However, the rally proved short-lived after the US Energy Energy Information Administration (EIA) reported a build in crude inventories of 5.8 million barrels for the week to 12 November.

Crude futures are poised for their fifth straight week of losses as growing output from key producers and a deteriorating outlook for oil demand deepen a sell-off spurred by October's broader market sell-off. Announcements of production increases by Saudi Arabia and other countries to cover anticipated disruptions had led to a crude oil future selloff during most of October.

At the session low, WTI touched $61.30/Bbl, falling 20.4% from last month's almost four-year high level of $76.90/Bbl.

The 10-day decline is the longest losing streak on record for USA crude, according to FactSet data going back to November 1984. At the same time, Saudi Arabia - under an worldwide cloud over the murder of journalist Jamal Khashoggi - had pledged to pump more oil to stabilize world markets. "OPEC and Russian Federation may use cuts to support $70 per barrel", said Ole Hansen, head of commodity strategy at Saxo Bank.

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