The price of oil fell to spring level

Fredrick Soto
November 9, 2018

Futures in NY are slipping for a tenth day, extending a dramatic plunge that has dragged prices down over 20 per cent from a 2014 high five weeks ago. The last time crude registered such a downtrend was mid 2014. "OPEC has put on more crude than we thought and second of all, these waivers are becoming an impediment to price support". Tehran worries OPEC and non-OPEC countries such as Russian Federation will increase their production to fill the gap in response.

The US on November 5 re-imposed sanctions on import of crude oil from Iran but temporarily allowed India, China, South Korea, Japan, Italy, Greece, Taiwan and Turkey to continue the purchase from the Gulf nation without any penalty. President Donald Trump said the waivers were meant to soften the blow to global crude markets.

Paris, Nov 9 US National Security Advisor John Bolton said Thursday that more sanctions were possible on Iran just days after a new round of measures touted as the most punishing ever on Tehran entered into force.

Still, a return to oil production cuts by OPEC and its allies next year can not be ruled out, two OPEC sources said this week, to avert a possible supply glut.

The first round of USA sanctions, which included cars, carpets, metals trading and access to the United States dollar, entered into force in August.

The net long position in the six most important petroleum-linked futures and options contracts was cut by a further 73 million barrels in the week to October 30.

Front-month Brent crude oil futures were at $71.85 per barrel at 0115 GMT, down 28 cents, or 0.4 per cent, from their last close. Prices are also on course for a fifth weekly drop, down 2.9 percent.

"OPEC was feeling the Trump pressure but producers took action with the thinking that they just needed to get past the USA election", said Joe McMonigle, analyst at Hedgeye in Washington, in a note Wednesday. After meeting with Russian Energy Minister Alexander Novak in Moscow, Lukoil PJSC First Vice President Ravil Maganov said Thursday that a resumption of cuts couldn't be ruled out, but that they didn't discuss specific figures.

In the week ending November, the US crude production hit a whopping 11.6 million bpd, according to Energy Information Administration (EIA) data released on Wednesday. Economists are expecting a build of 2 million barrels in crude oil inventories which is sort of bearish in nature, but less bearish than 4.1 million builds during the previous week.

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