Crude oil prices lower on oversupply concerns, Trump's comments

Petrol station

Image Petrol prices should soon start to fall sharply after two weeks of falling oil costs

On Oct. 3, when global benchmark Brent crude was sitting around its own four-year high of around US$85 a barrel, Saudi Arabia and Russia announced that they were increasing production in October and November; it was also reported that the Saudis and the Russians had agreed privately to raise production throughout the remainder of the year, in part in response to USA pressure to put a cap on prices. Now, investors are assessing if the Organization of Petroleum Exporting Countries and its allies will curb production despite President Donald Trump's criticism of the plan. Trump posted a tweet on Monday meant to put pressure on OPEC, calling for no supply cuts to prop up prices.

China is the world's biggest oil importer and the second-largest crude consumer.

Oil prices have lost about a quarter of their value in only six weeks, pressured by a slowing global economy and soaring crude output led by the United States. Total volume traded on Thursday was about 23% higher than the 100-day average.

Demand for its crude will be about 31.5 million bpd, which is 500,000 bpd less than its forecast two months ago and 1.4 million bpd below current output, Opec said this week.

Brent for January settlement gained 65 cents to settle at US$66.12 on the London-based ICE Futures Europe exchange. But the lift to prices on Wednesday - less than one per cent for WTI - suggests that even such assurances might fall short of restoring bullish sentiment. The global benchmark crude traded at a US$9.68 premium to WTI for the same month. "There's a sense that Trump really has them over a barrel at this point", she said. Depending on the final baseline, the reduction could be in the range of 1 million to 1.5 million barrels a day, one of the delegates said.

OPEC - led by Saudi Arabia - along with Russian Federation have been burned by previous decisions to refuse production cuts. Analysts predict a rise of 3.2 million barrels, according to a Bloomberg survey.

The agency raised its forecast for oil output growth from countries outside the OPEC to 2.4 million bpd this year and 1.9 million bpd next year.

Meanwhile, in the USA, crude inventories rose by 10.27 million barrels last week, while gasoline and distillate supplies declined, according to a report from the Energy Information Administration on Thursday.

Other oil-market news: OPEC and allied oil producers will cut or adjust production as needed to balance the market, the group's president, United Arab Emirates Energy Minister Suhail Al Mazrouei, said on Wednesday.

Anxious by a drop in oil prices due to record supply from Saudi Arabia, Russia and the United States, the Organization of the Petroleum Exporting Countries is talking of a U-turn just months after increasing production. Contributions of 200 words or more will be considered for publication.

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