Published: Fri, September 21, 2018
Money | By Armando Alvarado

Oil Prices Fall Amidst Escalating Trade Jitters

Oil Prices Fall Amidst Escalating Trade Jitters

Brent for November settlement fell 9 cents to $78.09 a barrel on the ICE Futures Europe exchange.

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

Since spring when the Trump Administration said it would impose the sanctions, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from Iran, the third-largest Organisation of Petroleum Exporting Countries (OPEC) producer, are cut.

In July, Saudi Arabia saw its highest crude oil stocks draw in eight months at 5.51 million barrels, after the Kingdom unexpectedly reduced its production compared to June while it kept exports stable, S&P Global Platts reported on Tuesday, citing data by the Joint Organizations Data Initiative (JODI).

U.S. crude inventories rose by 1.2 million barrels to 397.1 million in the week to Sept 14, according to data released on Tuesday by the American Petroleum Institute (API).

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, including the world's biggest producer Russian Federation, are meeting on September 23 in Algiers, Algeria, to discuss how they can allocate supply increases within their quota framework to offset the loss of Iranian oil supply.

Futures in NY closed 1.8 percent higher last week amid signs that looming US sanctions on Iran are whittling global supply levels.

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

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He didn't however address how the global oil industry immediately can replace Iranian crude supplies in an already-tight market.

Cementing that arrangement would be one of the topics of discussion as OPEC meets this Sunday in Algeria, he added.

Official U.S. government data is due to be released on Wednesday.

Bloomberg reported on Tuesday, citing unnamed Saudi sources, the kingdom was now comfortable with prices above $80 per barrel, at least for the short-term.

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He also said that at a meeting in Algeria on September 23, oil producers will discuss the best mechanism to adopt to ensure they reach 100 percent compliance with crude supply targets.

But supporting crude futures were potential supply cuts from USA sanctions on Iran.

Saudi Arabia has mentioned several times recently that they have no desire to push oil prices over $80/barrel, a move higher may be unavoidable as United States sanctions on Iran are set to come into effect beginning November 4th.

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