Published: Sat, September 22, 2018
Markets | By Josh Butler

Oil prices steady as concerns about producer output outweigh USA stockpile gain

Oil prices steady as concerns about producer output outweigh USA stockpile gain

Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week, while China's refiners used about 11.8 million bpd in August, according to government data from the countries.

But the current calm could be short-lived in light of the intensification of USA hostilities toward Iran, according to IEA.

Traders work in the crude oil and natural gas options pit on the floor of the New York Mercantile Exchange.

The news agency reported while Saudi Arabia had no desire to push prices higher than $80/Bbl, it may no longer be possible to avoid it. USA sanctions affecting Iran's petroleum sector are due to come into force from November 4.

The prospect of Russian Federation and the US working together to achieve global supply and demand objectives is intriguing given the long-standing rivalry between the USA and OPEC; but it makes sense when one considers that both the USA and Russian Federation have a strong mutual ally in energy matters, namely, Saudi Arabia. Russia, the world's largest oil producer, and other producers in OPEC have kept in place a supply agreement to maintain prices while at the same time providing enough oil to the market.

U.S. West Texas Intermediate (WTI) crude CLc1 gained 94 cents to settle at $69.85 a barrel, a 1.4 percent increase.

Iranian oil exports have plunged about 35 percent since April, the month before Trump ripped up the diplomatic deal that President Barack Obama negotiated to curtail Tehran's nuclear program and announced new oil sanctions.

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“Investors are now assessing the Saudis' mixed message on oil prices versus its earlier pledge to increase output, ” said Hong Sungki, a commodities trader at NH Investment & Securities Seoul.

Oil prices were up early Tuesday morning amid reports that Saudi Arabia would be comfortable letting oil prices rise above $80 a barrel.

Brent may fall more than $1 to $76.37 a barrel, while WTI crude prices may revisit their September 14 low of $67.94, he wrote.

Reuters previously reported Saudi Arabia wants crude to stay between $70 and $80/Bbl maximizing revenue and keeping a lid on prices until US congressional elections.

Intensifying trade tensions between the US and China could hit economic growth and reduce crude oil demand next year, while supply disruption risks could push prices further upward, according to the International Energy Agency (IEA).

The potential for a full-blown trade war between the US and China could also undercut demand by reducing economic growth globally.

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