Record U.S. crude production and signals from Iraq, Abu Dhabi and Indonesia that output will grow more quickly than expected in 2019 pushed the price of Brent oil to its lowest since mid-August earlier in the week.
U.S. West Texas Intermediate crude ended Tuesday's trading session down 89 cents, or 1.4%, to $62.21 a barrel, Kallanish Energy reports.
Even with USA sanctions on Iranian oil in place, the perception among investors is that there is more than enough supply to meet demand, as reflected by the front-month January Brent futures contract trading at a discount to February.
Crude oil prices fell Tuesday, briefly entering bear market territory, after the USA said it will allow some of Iran's biggest customers to continue importing the Opec member's crude without violating reinstated US sanctions. When they meet this weekend, the producers will have to contend not only with the threat of a glut, but also the risk to demand from faltering emerging-market economies and a trade war between the United States and China.
China's producer price inflation slowed for the fourth month in October on cooling domestic demand, suggesting that economic momentum in the world's second-largest economy is softening in the face of simmering trade frictions with the United States.
In China, a flotilla of supertankers carrying around 9 million barrels of Iranian oil worth about $650 million is sitting outside Dalian port.More news: Stats You Won't Believe About Duke's Monstrous Season Opener Against Kentucky
India on Thursday appreciated the United States decision to grant it an exemption from Iran-related sanctions for oil purchases and the development of the Chabahar Port.
At the same time, output from the world's top-three producers, Russian Federation the United States and Saudi Arabia, is rising. It granted temporary exemptions to eight countries allowing them to continue importing Iranian oil, although it said the ultimate goal is to completely halt exports from Iran. (CNPC) said on Friday it was still taking oil from Iranian fields in which it has stakes.
Last week's increase in US crude inventories was the seventh week of gains, the longest stretch since early March, according to Energy Information Administration data.
Crude futures are poised for their fifth straight week of losses as growing output from key producers and a deteriorating outlook for oil demand deepen a sell-off spurred by October's broader market sell-off.
A barrel of U.S. light crude oil, which hit a near four-year high of $76.41 on 3 October, was today trading as low as $60.06, representing a drop of 21%. Specifically, Trump relies on top exporter Saudi Arabia to leverage its influence over other OPEC members to increase output and prevent oil prices from spiking as Iran's exports dwindle.
More US oil will likely come. "OPEC and Russian Federation may use cuts to support $70 per barrel", said Ole Hansen, head of commodity strategy at Saxo Bank.