Crude oil prices fall on rising USA crude inventories, record production

03 May, 2018, 16:55 | Author: Mable Gonzales
  • Oil steady on Iran sanction worries, but surging US supplies cap market

Net crude imports at 6.4 Mbd, with Saudi Arabia, Venezuela, Mexico, and Iraq as major suppliers.

Sources said Turkey's purchases of Iranian oil are likely to be strong even if sanctions are re-imposed but that might not be the case for some of the countries in the EU. The Brent Crude, the global benchmark, briefly soared above $75 per barrel on Monday after Israeli Prime Minister Benjamin Netanyahu claimed that Iran was lying on its implementation of JCPOA conditions. Weekly figures are considered less reliable, and the industry relies more on monthly data; the EIA on Monday said production in February rose to a record 10.26 million bpd, which ranks it second in the world behind Russian Federation.

"There will be a significant disruption", said Michael Wittner, global head of oil research at Societe Generale.

"I prefer Iranian crude all things considered We have been discussing [the Iranian issue] a lot - but no one will know what happens", a third buyer or Iranian crude said.

The oil market is already tight and on track to get tighter.

WTI crude futures price on NYMEX is seen paring back gains during trading sessions of Europe, as the bulls face exhaustion following the relief rally from $ 67.81 levels on the protectionism, sanctions, and geopolitical risks have brought volatility to the fore in commodities with oil prices, in particular, breaking out of the tight monthly range of $45-65/bbl (Brent). While opinions vary widely, the fact remains that oil consumption does respond to price changes and there is no hard threshold that marks when that response begins. Other reasons he cited were geopolitical disturbances and whether the Iran nuclear deal will be recertified or not.

Under the deal, Iran agreed to limits on its nuclear activities, including bans on enrichment at key facilities.

Iran exported record-high volumes of crude oil and condensate of 2.877 million barrels a day to Asian and European markets, Shana reported.

According to FEG estimates, if the sanctions are restored, Iran's output could be slashed by 250,000 to 50,000 barrels per day by the end of 2018.

Michael Poulsen: Depends, of course, exactly on the amount of sanctions that are imposed but assuming it's the same as last time around then it will be about a million barrels per day.

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Oil prices rose again on Wednesday on concerns the USA may re-impose sanctions on major exporter Iran, before giving up.

Other American allies, including India, Japan and South Korea, are expected to cut Iran off. The price spiked up yesterday as statements by the leaders of Israel and the United States of America seemed, taken together, to suggest a greater likelihood of President Trump effectively withdrawing from the "Iran deal" on 12th May, by which time he must decide whether to reintroduce sanctions against Iran or not.

"Overall, where official selling prices are right now, Iranian is the most profitable, but it is more a strategy than a pure question of price, as you have to factor that in due to banking restrictions", he said. He anticipates crude oil could jump another $5 per barrel once the news is confirmed.

Sputnik: If the U.S. introduces additional sanctions on Iran what impact can the loss of Iranian oil production have on the global oil market in general, you've mentioned a couple of points, but can you give us an overview of what your thoughts are?

One thing that could give Trump pause: It's a precarious time to put Iran back into the penalty box.

Some analysts feel that unless Trump gets global support, particularly vocal support from Europe, his decision to withdraw from the deal may not have a substantial impact on Iran's oil exports.

U.S. producers are being given some incentives in an effort to encourage production even while OPEC and other producers including Russian Federation try to curb supplies and raise prices.

Presently, Angola is suffering sharp declines at under-invested offshore fields, with output dropping nearly three times as much as the nation pledged in an accord with fellow OPEC members.

The oil market is now on an unsustainable trajectory, with global demand growth systematically outrunning supply.

It's possible the United States could step up by boosting exports. The backwardation is high and could rise even further. And pipelines in the Permian Basin, the prolific shale oil field in West Texas, are nearing full capacity.

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