World­wide sur­plus push­ing down oil prices

The Day - - BUSINESS - By SA­MUEL ROBIN­SON

Oil notched its long­est los­ing streak in four years as ex­pand­ing U.S. stock­piles over­shad­owed sup­ply con­cerns from the Per­sian Gulf to Latin Amer­ica.

Fu­tures fell as much as 1.4 per­cent in New York late last week, ex­tend­ing the de­cline to a ninth day. The last time crude reg­is­tered such a down­trend was mid 2014. Amer­i­can oil in­ven­to­ries grew at more than twice the an­tic­i­pated pace last week, a gov­ern­ment re­port showed on Wed­nes­day. That sup­ply over­hang trumped in­di­ca­tions OPEC may dis­cuss pro­duc­tion cuts as soon as this week­end.

Crude has tum­bled 20 per­cent since touch­ing a four-year high last month as ap­pre­hen­sion over sanc­tions tar­get­ing Ira­nian oil ex­ports evap­o­rated, in part be­cause of ex­emp­tions handed to some of the Is­lamic Re­pub­lic's big­gest cus­tomers. Pres­i­dent Don­ald Trump said the waivers were in­tended to soften the blow to global crude mar­kets.

“Most of this sell­ing pres­sure is re­lated to the re­moval of fears con­cern­ing tight sup­plies from the drop in Ira­nian ex­ports and the grant­ing of those tem­po­rary waivers,” said Gene McGil­lian, a se­nior an­a­lyst and bro­ker at Tra­di­tion En­ergy.

Con­sul­tant FGE es­ti­mated the waivers granted to China, In­dia and six other na­tions will al­low Iran to con­tinue ship­ping 1.2 mil­lion to 1.7 mil­lion bar­rels a day, more than pre­vi­ously ex­pected.

“OPEC and Rus­sia may use cuts to sup­port prices at $70 a bar­rel,” said Ole Sloth Hansen, head of com­mod­ity strat­egy at Saxo Bank in Copen­hagen. “But the U.S. sanc­tions waivers could pre­vent prices from break­ing above $80.”

Last week's in­crease in U.S. crude in­ven­to­ries was the sev­enth week of gains, the long­est stretch since early March, ac­cord­ing to En­ergy In­for­ma­tion Ad­min­is­tra­tion data.

SI­MON DAW­SON/BLOOMBERG

An oil drilling well in­side the Saudi Aramco oil com­pany’s com­pound in Dhahran, Saudi Ara­bia, last month.

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