Published: Sat, November 03, 2018
Markets | By Jeffery Armstrong

Oil prices fall on signs of rising supply, economy worries

Oil prices fall on signs of rising supply, economy worries

"There's probably an element of truth to that", said Bob Yawger, director of futures at Mizuho in NY.

"The strong build in oil inventories is likely to keep downward pressure on oil prices", ANZ Research analysts said in a note.

The oil market has a bullish catalyst ahead as US actions against Iran will become official Sunday, Kilduff said.

Crude oil futures were linked primarily to the sell-off in global equity markets in October, sinking as investors sold risk assets.

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Monthly crude oil production in several US states reached a record high.

"The market is discounting this expectation right now", Thorpe said. "The focus has shifted, leading to a sell-off by hedge funds, and that's causing the slide".

Goldman Sachs said it expected Iran's crude oil exports to fall to 1.15 million barrels per day by the end of the year, down from around 2.5 million bpd in mid-2018. Total volume traded was 10 percent above the 100-day average. US West Texas Intermediate (WTI) crude futures fell 86 cents to settle at US$66.18 a barrel, a 1.3 per cent drop. The contract is down 6.3 percent this week, a fourth consecutive week of declines. The global benchmark crude traded at $9.41 premium to WTI for the same month.

The second week saw United States crude oil open bearish but price edged higher up owing to news of partial shutdown of oil rigs in Gulf of Mexico owing to hurricane Michael and reports of falling crude exports from Iran ahead of USA sanctions as investors worries that U.S. demand for oil embargo could result in significant supply shortfall. The other four that will get waivers weren't identified.

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Iran was selling roughly 1.7 million to 1.9 million barrels per day (Mmbpd) in September.

Saudi Arabia would also raise its daily crude oil output to 11 million barrels from 10.7 million barrels and the country has a capacity to generate 12 million barrels of crude oil each day, according to Al-Falih.

New York's NYMEХ (New York Merchantile Exchange) is a United States futures market founded in 1882. "While it may take longer, substantial Iranian losses appear unavoidable and the outlook for prices remains constructive".

The focus now remains on the USA jobs report for fresh impetus on the USD-sensitive commodity ahead of the U.S. rigs count data release. Energy Information Administration data showed USA crude inventories last week climbed for a sixth straight week.

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Russian oil output has reached 11.41 million bpd, a level unseen since the collapse of the Soviet Union in 1991, an industry source told Reuters.

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