Published: Fri, November 09, 2018
Markets | By Josh Butler

WTI Crude Oil Breaks Below Triple Bottom - EIA Report Up Next

WTI Crude Oil Breaks Below Triple Bottom - EIA Report Up Next

A return to oil production cuts by the Organisation of Oil Exporting Countries (OPEC) and its allies can not be ruled out next year, a senior OPEC source said yesterday.

Broader oil markets continue to see steady declines, and WTI barrels have fallen by 20% in barely sick weeks.

Oil continues to fall on Friday on fears of a surplus of fuel on the world market, while Brent updated at least since April 10, while WTI dropped to the lowest level since March 8.

Even with USA sanctions on Iranian oil in place, investors believe there is more than enough supply to meet demand.

Iraq, the second-largest producer within the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia, is targeting production capacity of 5 million bpd in 2019, up from 4.6 million bpd now, Oil Minister Thamer Ghadhban said on Tuesday.

The sanctions that came into force Monday target Iran's energy, financial and shipping sectors and mark the end of USA participation in the 2015 nuclear deal that President Donald Trump withdrew from in May.

In the USA, crude production increased to 11.6 million barrels per day last week, the highest level on record, according to Energy Information Administration data.

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Russia, itself a target of separate USA sanctions, expected there would be ways to pursue economic cooperation with Iran despite the United States sanctions, he added.

The EIA report showed domestic crude production jumped to 11.6 million barrels per day while stockpiles at Cushing, Oklahoma, increased by 2.42 million barrels.

Record U.S. crude production and signals from Iraq, Abu Dhabi and Indonesia that output will grow more quickly than expected in 2019 pushed the price of Brent oil to its lowest since mid-August earlier in the week. Opec also pledged to offset any supply gaps. These are also Iran's biggest buyers, meaning Iran will be allowed to still export some oil for now.

Saudi-led oil cartel and its allies, including Russian Federation, decided in June to relax output curbs in place since 2017, after pressure from United States (U.S.) President Donald Trump to reduce oil prices and make up for supply losses from Iran.

With oversupply looming, production cuts might be on the horizon once again.

The Saudis have, since the 1970s, been able to exert disproportionate influence on global oil prices by - along with other Opec producers - cutting production at various times.

That will have profound implications not just for oil prices but, ultimately, geopolitics.

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