Oil set for long­est los­ing run since 2014 as sup­ply fears ease

The Star Malaysia - StarBiz - - Foreign News -

SIN­GA­PORE: Crude’s poised for the long­est los­ing streak since 2014 as con­cerns of a sup­ply crunch eased on a fore­cast for ris­ing US pro­duc­tion and waivers for eight coun­tries al­low­ing tem­po­rary im­port of Ira­nian oil.

Fu­tures in New York fell as much as 0.9% and headed for an 8.4% drop in eight straight ses­sions. The US gov­ern­ment fore­cast the na­tion’s oil out­put will in­crease at a record pace this year, while in­dus­try data sig­naled Amer­i­can crude in­ven­to­ries rose last week.

Mean­while, the waivers will al­low Iran to con­tinue some ex­ports to its top cus­tomers for an­other six months.

Sup­ply con­cerns that drove crude to a four-year high last month faded on spec­u­la­tion the US would soften the blow of its sanc­tions on Iran to lower pump prices at home. The Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (Opec) also pledged to off­set any sup­ply gaps. The group led by Saudi Ara­bia will gather in Abu Dhabi this week­end as they face a fresh surge of US shale oil threat­en­ing to un­leash a new sur­plus in 2019.

“The fo­cus for now re­mains on the waivers is­sued to eight coun­tries, al­low­ing them to con­tinue the pur­chase of Ira­nian bar­rels tempo- rar­ily,” said Stephen Innes, Sin­ga­pore-based head of trad­ing for Asia Pa­cific at Oanda Corp.

“There were more bear­ish over­tones in terms of sup­ply with the Amer­i­can crude out­put seen ris­ing this year by the most ever, cou­pled with the call on Opec to ramp up even higher.”

West Texas In­ter­me­di­ate (WTI) crude for De­cem­ber de­liv­ery dropped as much 54 cents to US$61.67 a bar­rel on the New York Mer­can­tile Ex­change and traded at US$61.92 on the New York Mer­can­tile Ex­change at 12:16 pm in Sin­ga­pore. To­tal vol­ume traded was al­most dou­ble the 100-day av­er­age.

Brent fu­tures for Jan­uary set­tle­ment slid 11 cents to US$72.02 on the Lon­don-based ICE Fu­tures Europe ex­change. The con­tract fell 1.4% to close at US$72.13 on Tues­day. The global bench­mark crude traded at a US$9.95 pre­mium to WTI for the same month.

In the US, the gov­ern­ment is es­ti­mat­ing the big­gest yearly in­crease in do­mes­tic crude pro­duc­tion. The out­put will av­er­age 10.9 mil­lion bar­rels a day this year, up from 9.35 mil­lion in 2017, the big­gest gain on record, ac­cord­ing to the En­ergy In­for­ma­tion Ad­min­is­tra­tion (EIA).

At the same time, in­dus­try data was said to show that na­tion­wide oil in­ven­to­ries rose by 7.83 mil­lion bar­rels last week, while a me­dian es­ti­mate in a Bloomberg sur­vey of an­a­lysts ex­pected a two-mil­lion-bar­rel in­crease ahead of gov­ern­ment data Wed­nes­day.

While Iran’s ex­ports have plunged by al­most 40% since April, the In­ter­na­tional En­ergy Agency says Opec must still in­crease out­put to meet “ro­bust” global de­mand growth. Fur­ther drop in Ira­nian pro­duc­tion is ex­pected but the ex­tent will de­pend on ne­go­ti­a­tions be­tween the US and coun­tries po­ten­tially seek­ing waivers, Fatih Birol, IEA ex­ec­u­tive di­rec­tor, said in an in­ter­view. — Bloomberg

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