Brent Crude Price Drops To $75 From $86 High

Brent Crude Price Drops To $75 From $86 High

Oil prices dropped again after two-week loss.

WTI (oil futures on NYMEX) is back into the red zone and looks set to test the 63 handle, as the sentiment remains dampened by mounting concerns over rising crude output from the world's top 3 oil producers - Russia, the United States and Saudi Arabia.

"Year-on-year growth in USA crude oil production has averaged nearly 1.5 million barrels per day in the first eight months of the year. with output from many key producing regions reaching new all-time highs", said Barclays bank.

On Monday, U.S. oil prices inched up 0.07 percent despite vow of Saudi Arabia to enhance oil production.

Earlier in the session, Brent reached a session low of $75.09 a barrel, while WTI slumped to $65.33 a barrel.

Analysts now believe that surging output from the world's three largest producers outweighed supply concerns from the start of US sanctions against Iran's petroleum exports which is expected to become active this weekend.

"Many countries' current account deficits have been affected by high oil prices".

So, the market is betting on supply that may be there later but it is clear that it is not here now. EIA forecasts USA crude oil production to increase by 1.0 million b/d in 2019.

After hitting a multiyear high just one month ago, US light crude has lost almost 20 percent and has shown a pattern that hasn't been seen in some time, according to energy expert John Kilduff.

Production in the U.S. is now estimated to be more than 11 million barrels a day and growing.

Thursday's drops came after U.S. Energy Information Administration data showed crude oil inventories climbed for a sixth straight week. Output in October rose by 200,000 bpd to 3.25 million bpd, the survey found, and could in theory rise further as the UAE says its oil production capacity will reach 3.5 million bpd by the year-end.

Brent crude futures fell $1.57 a barrel to $73.47 a barrel as of 11:38 a.m. EST (1538 GMT), while US futures were down $1.40 a barrel at $63.91.

Meanwhile, India's imports from Iran rose 27 percent from the same month previous year to 527,600 bpd, and buyers there plan to take 9 million barrels of Iranian oil in November, an industry source said, indicating a commitment to continuing purchases. The U.S. surpassed Russian Federation in August to claim the title of world's top oil producer, with the largest year-on-year output increase in U.S. history. EIA also forecast that total global liquid fuels inventories to decrease by 200,000 barrels per day in 2018, followed by an increase of 280,000 barrels per day in 2019. The last time this measure exceeded 50k contracts was back in July, just in time for oil to rally from $70 to $86 over the next two months. Saudi Arabia was pumping at then-record levels, and USA drillers were adding rigs to American oil fields. WTI increased 0.51 dollar to settle at 67.33 dollars a barrel, while Brent added 0.72 dollar to 76.89 dollars a barrel.

Increases in global supply, as well as trade war tensions between the USA and China, sent oil plunging earlier in the week.

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