Oil Falls on Rising OPEC Production

18 September, 2018, 14:23 | Author: Brooke Harris
  • Oil prices climb as Iran sanctions loom

Demand for crude from the Organization of the Petroleum Exporting Countries will moderate in 2019 to 31.9 million bpd, from an estimated 32.3 million bpd this year, the IEA said.

U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.12 to settle at $70.37 a barrel, a one-week high.

"The path of least resistance for oil prices, given the supply fundamentals, remains up", Harry Tchilinguirian, oil strategist at BNP Paribas, told Reuters Global Oil Forum.

Traders said US markets were lifted by a tightening outlook for fuel markets in the coming months.

"Rising trade tensions, and the consequences of further potential monetary tightening by G4 central banks, in combination with rising global debt levels, are additional concerns".

John Kemp, market analyst for Reuters, views 2019 is a radically different light: on Wednesday he stated in an opinion piece that "Slower growth in USA production, when combined with strong demand, production problems in Venezuela and other countries, and the re-imposition of sanctions on Iran, is enough to tighten the global market in late 2019".

The energy group is an intergovernmental body set up within the framework of the Organisation for Economic Co-operation and Development after the 1973... The meeting could make policy recommendations. "But traders are now pivoting to the Opec and non-members' meeting next week in Algeria".

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According to ship tracking data compiled by Bloomberg, Iranian oil and condensate exports were below 2.1 million bpd in August-the lowest levels since March 2016, with crude oil exports at their lowest since January this year.

The biggest rise came from Libya, which is exempt from the agreement.

Outside the United States, traders have been focusing on the impact of looming US sanctions against Iran, which will target oil exports from November. In addition, figures provided by Iran's Central Bank show that Iran's revenues from oil sales soared by 84.2 percent over that same period, setting a new record.

Still, fears over a supply crunch persisted, with Iran's output slumping by 150,000 barrels last month, according to Opec's monthly market report.

Last month, in its August STEO, the EIA predicted that ethanol production would average 1.04 million barrels per day in both 2018 and 2019. This suggests there will be a 500,000-barrel-a-day surplus in the market should OPEC keep pumping the same amount and other things remain equal.

These are the highest oil prices since 2014, when a glut of oil, much of it from new shale wells in the United States, sent prices tanking.

Amrita Sen, chief oil analyst at Energy Aspects, expects Iran's exports to drop by between 1.5 million to 1.7 million bpd from the 2017 average.

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