Oil prices drop as rising supplies meets global economic gloom

Oil prices drop as rising supplies meets global economic gloom

In a bearish signal, the American Petroleum Institute reported USA crude inventories rose 5.7 million barrels last week, more than analyst's forecasts for a 4.1 million barrel build.

China - the leading importer of Iranian oil - is still in discussions with the USA on terms, but is among the eight countries set to receive a waiver, according to two people familiar with the discussions who also asked not to be identified.

Iran was selling roughly 1.7 million to 1.9 million barrels per day (Mmbpd) in September.

"It's a very confusing time for the oil market, which is grappling with a very fundamental question about whether we have a supply problem or not and the answer has been unclear", said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions.

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

Oil production from Russian Federation, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed.

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.

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Beyond Iran sanctions, oil output has been rising significantly in the past two months.

In October, crude oil shed about 11%, the biggest monthly loss in more than two years.

New U.S. sanctions on Iran begin on November 4 and Washington has made it clear to Tehran's customers that it expects them to stop buying any Iranian crude oil from that date.

Meanwhile, the earlier bounce in the barrel of WTI was mainly driven by a boost in the risk sentiment, triggered by the optimism over the US-China trade deal and the US oil waivers from Iran sanctions.

Four major Asian buyers of Iranian crude imported a total of 1.13 million barrels per day (bpd) from Iran in September, the data released by Reuters showed.

Oil was also being weighed down by signs of rising supply from top producers. The third week saw steeper fall in crude oil price as news of Saudi journalist hit market which caused tensions to spark between US & Saudi Arabia with US President Donald Trump commenting that US government will impose sanctions if proof was found regarding involvement of Saudi Arabia in the murder of Saudi Journalist. Consultant Rystad AS estimates that even at $55 a barrel, the nation's output may reach 16.5 million barrels a day by 2030. This increase was in line with the increase in production from the United States.

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