Oil prices fall on rising supply, trade tensions

Oil prices fall on rising supply, trade tensions

The American Petroleum Institute (API) reported yet another crude oil inventory build this week, this time of 5.69 million barrels for the week ending October 26. Also weighing on the outlook for oil are fears of a slowdown in global, growth, particularly in emerging markets, which would likely mean weaker demand for the valuable commodity.

"Right now, from a crude oil perspective, the market is well supplied".

United States oil production that was surprisingly flat for the last few weeks nearly magically surged rising by 300,000 barrels a day, from 10.9 million barrels to 11.2 million barrels a day in one week, one of the biggest weekly jumps in recent memory. While it is unclear to what extent the impact will have on global oil markets, it could pave a path for a rebound in oil prices toward the $75-per-barrel level by the end of the year. Saudi Arabian government responded with an indirect threat to US Government stating that any interference from President Trump or US Government in regards to death of the journalist will result in Saudi Arabia retaliating by driving oil price higher.

A list of all countries getting USA waivers allowing them to import Iranian oil is expected to be released officially on Monday, industry sources say. 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.

In the U.S., crude production posted a record high at 11.2mbpd with production rising at a faster pace than the fracking boom of 2014, while Saudi Arabia is pumping oil at 10.45mbpd and recently stating that they could boost oil supply by 1-2mbpd in the near term.

Investors are weighing market sentiment ahead of new US sanctions on Iran that begin on November 4. For example, should the world lose Iran's 2.7 million barrels per day, OPEC may not be able to fill the gap. "We can not end oil imports from Iran at a time when alternatives are costly", noted the Indian government, as quoted by Reuters. That's a post-Soviet record, and not far off the highest-ever production.

The market is growing confident output from other sources, including Saudi Arabia/Opec, Russia and the USA, can offset the declines.

In addition, the United States is increasing its oil production rates and doing its bit to help lower the oil price.

Prices pared earlier losses on Friday after Bloomberg news reported that U.S. President Donald Trump wants to reach an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina later this month and has asked key U.S. officials to begin drafting potential terms.

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