Oil drops as supply meets gloom

Oil fell yesterday, set for its fourth consecutive week of declines, as rising crude supply met the bearish combination of concern over global growth and weak equity markets.

Russia is pumping oil at a post-Soviet high, US crude output has topped 11 million barrels a day and a Reuters survey shows Opec more than made up for any declines in Iranian shipments in October.

Brent crude futures were down 52 cents at $74.52 (Dh273) a barrel by 1300 GMT, while US futures were down 32 cents at $64.99 a barrel.

“Given these (output) numbers, with Russia pumping hard and the United States and Opec as well, and we are not really seeing a pickup in demand for another month ... it could indicate we’re back to the good old $70-$80 range that persisted through April and August,” Saxo Bank senior manager Ole Hansen said.

A Reuters survey on Wednesday showed the Organization of Petroleum Exporting Countries raised oil production last month to its highest since 2016, led with gains by UAE and Libya.

Brent and US crude posted their biggest monthly percentage decline since July 2016 in October, with Brent down 8.8 per cent for the month and US crude losing nearly 11 per cent.

Negative impact

Adding to the negative impact of the Opec output figures, the US Energy Information Administration on Wednesday reported a sixth straight week of builds in US crude inventories.

Brent has declined from a 2018 high of $86.74 in early October, driven lower by growing concern over a possible slowdown in global growth as the US-China trade dispute heats up and hits emerging market economies in particular.

“Oil investors are now betting on the potential of a global slowdown,” said Bruce Xue, an analyst with Huatai Great Wall Capital Management. US sanctions on Iran’s exports come into force on November 4 and it is unclear how much its roughly 3.8 million bpd production will be affected.

Bahrain’s state-owned oil company Nogaholding has raised $1 billion (Dh3.67 billion) through a dualtranche bond, a document issued by one of the banks leading the deal showed.

The sale is the first international debt issuance by a Bahraini entity since the government obtained an aid package from its Gulf neighbours last month. Rated BBby Fitch, Nogaholding, the investment arm of Bahrain’s National Oil and Gas Authority, sold a $500 million sixyear bond offering a 7.625 per cent yield, and a 10-year bond of the same value yielding 8.375 per cent, the document said. (Reuters)