Published: Sat, November 03, 2018
Money | By Bruce West

Oil prices down more than 1% on rising supply, trade war

Oil prices down more than 1% on rising supply, trade war

US inflation nearly reached 3% during the summer of 2018, while the United Kingdom consumer price index has risen from 2.4% in June, to 2.7% by September. Both stock markets and crude futures jumped in early October before selling off sharply. "This is the highest correlation I've seen in quite some time".

Oil has been caught in the global financial market slump this month, with equities under pressure from the trade fight between the world's two largest economies. Continuing trade tensions between the US and China are raising concerns slower economic growth will slow the demand for oil. The last week of October saw crude oil continue to trade bearish owing to firm United States dollars in broad market and bearish equity markets putting pressure on purchasing power of investors from Asia and other emerging markets.

But there's another similarity between July 2016 and October 2018. Meanwhile, India and South Korea were said to agree with the US on the outline of waivers from sanctions to keep importing some Iranian oil.

Influencing Tuesday's crude price movements were ongoing fears that the trade dispute between the United States and China will get worse, Bloomberg reported earlier.

But in the last month, forecasters have warned that oil demand will grow more slowly than anticipated in the coming months.

With Iranian sanctions on the horizon, oil production has been increasingly significantly in recent months from the world's top producers.

Oil is poised for the biggest weekly loss since February on concerns over growing supply at a time when speculation is increasing that US sanctions on Iran won't cut the OPEC producer's exports to zero.

Washington has made it clear to Tehran's customers that it expects them to stop buying any Iranian crude oil from that date.

Iran on Friday said that the waivers granted by the U.S. showed the Iranian crude was needed and could not be withdrawn from the market.

In a commodities update report from Capital Economics, the outlook for a stronger oil price was less than enthusiastic.

Oil prices turned positive on Wednesday after government data showed USA fuel stockpiles dropped, offsetting a rise in the nation's crude inventories.

Crude for delivery in November was trading lower by Rs 18, or 0.31 per cent, to Rs 4,644 per barrel, with a business volume of 3,014 lots. Brent was up 29 percent over the same period. On Tuesday, crude oil futures closed down $0.86, or 1.3%, at $66.18 a barrel. Grisanti is watching for WTI to break above its 200-day moving average at $67.47 for a rebound.

Crude oil prices have already declined significantly over the last month, going from a high of almost $87 per barrel on October 3 to about $72.55 per barrel on Friday. I think that the narrative over the last two months has changed.

Like this: