Oil futures lose more ground in electronic trading after API supply data

Irving Hamilton
October 14, 2018

Despite the fall in output, US crude futures settled down more than 2 percent at $73.17 per barrel on Wednesday, tracking the weaker USA stock market and reflecting the declining importance of Gulf of Mexico output due to burgeoning growth from onshore shale fields.

US crude futures CLc1 were trading down over 1 percent at $74.14 per barrel Wednesday morning, reflecting the declining importance of Gulf of Mexico output that has resulted from the growth of production from the nation's onshore shale fields.

Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, taking a major hit from US sanctions and throwing a challenge to other OPEC oil producers as they seek to cover the shortfall. According to the Bureau of Safety and Environmental Enforcement, companies in the area have reduced crude oil production by 670,800 barrels as of yesterday.

On Friday, Baker Hughes reported USA energy companies added 8 oil rigs last week.

Brent crude last week reached $86.74, the highest since 2014.

India had planned to import about 25 million tonnes of crude oil from Iran in the current fiscal year, up from 22.6 million tonnes imported in 2017-18.

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OPEC has revised down its oil demand growth estimates for this year and next-a third downward revision in as many months-citing potential headwinds to global economic growth ranging from trade disputes to weakening finances in emerging markets and geopolitical challenges.

Oil prices fell as USA stock markets skidded on Wednesday, with the S&P500 stock index marking its biggest one-day fall since February.

OPEC increased its production in September by 132,000 barrels per day compared to last month to an average of 32.76 million per day, with crude output up mostly in Saudi Arabia, Libya, and Angola, the report claimed. While Iran's output fell by 150,000 barrels a day and Venezuela lost 42,000 barrels a day, Saudi Arabia and Libya more than offset the decline. He further added that Saudi Arabia representatives have been claiming that they are able to balance Iran's losses under the USA pressure.

The global benchmark posted a 1.3% gain on Tuesday. It may lower fuel demand in the US southeastern markets by 1 million barrels a day, according to Mizuho Securities.

USA light crude was up 40 cents at $74.69.

The cartel believed that the slowing economic growth and the increase of the world oil supply, led by the United States shale output rise are the reasons of oil demand decrease. OPEC and its allies "are ready and willing to continue to make sure that the market remains well supplied".

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