Oil prices down a second session, ahead of USA supply data

Aaron Brown
October 7, 2017

Oil inventories dropped sharply by 6 million barrels with more refining activity back online after Hurricane Harvey, and the country averaged exporting nearly 2 million barrels of oil per day for the first time for a full week, according to the U.S. Energy Department.

While the inventory draws keep piling on the United States, the global supply/demand situation for crude oil is still not balanced, and fears are that OPEC's now proposed end date of March 2018 for the cuts will prove to be too soon. West Texas Intermediate crude of $54 a barrel for the fourth quarter, and $58 a barrel for Brent crude, the global benchmark.

Azerbaijan's participation in joint oil production cuts is defined at 35,000 barrels per day. Commodities closely linked to China's economy are now ceding the way to the oil market, where the market is tightening after three years of oversupply, he said.

According to Hansen, the increase in production in Libya and Nigeria, as well as among USA companies developing shale deposits, had a negative impact on oil prices in 1H17.

But even members who are supposed to adhere to the agreement, like Iraq, have strayed.

The contract, which expired at the session's end on Friday, rose 1% for the week, 8.8% for the month and 16.6% for the quarter.

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However, in a Monday letter the National Oil Company declared force majeure on deliveries from Sharara, the country's largest oilfield.

Prices rose more than 12% in the third quarter, as signs of lower global inventories and decreased production pushed crude futures into a bull market in late September.

US production is also weighing on the market.

But a stronger dollar is also impacting the oil market.

Analysts say the war of words in the wake of Kurdish voters overwhelmingly voting in favour of independence from Iraq on Monday continues to send tremors through the market.

The increase has been triggered by the wide discount in U.S. WTI prices against worldwide Brent crude prices, which makes U.S. oil exports attractive. "Talk of a more hawkish replacement for Janet Yellen is one reason". Therefore, the higher value of the USA dollar has made it more expensive for people not in the U.S., to buy oil.

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