Oil prices continue to fall amid rising crude supply

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HOUSTON, Nov. 4 (Xinhua) — Oil prices dropped again after three-week loss. The price of the West Texas Intermediate (WTI) for December delivery and Brent crude for December delivery lost 6.6 percent and 6.2 percent, respectively, during the week ending Nov. 2.

On Monday, oil prices declined as investors worried that persistent trade tensions between the United States and its trade partners could reduce global crude demand. WTI decreased 0.55 U.S. dollar to settle at 67.04 dollars a barrel, while Brent lost 0.28 dollar to 77.34 dollars a barrel.

Global equities suffered big losses last week due to concerns about corporate earnings and fears over the escalating trade tensions, which raised concerns over a potential slowdown in energy demand.

Rising U.S. oil output also dampened investor sentiment. The number of rigs operating in U.S. oil fields rose by two to a total of 875 rigs last week, marking the highest level since March 2015.

On Tuesday, oil prices retreated further as traders awaited the U.S. crude stockpile data scheduled for release Wednesday. WTI decreased 0.86 U.S. dollar to settle at 66.18 dollars a barrel, while Brent lost 1.43 dollars to 75.91 dollars a barrel.

Meanwhile, a stronger U.S. dollar made the dollar-priced commodity less attractive for holders of other currencies.

The Dollar Index, which measures the greenback against six major peers, rose 0.45 percent at 97.0104 in late trading on Tuesday.

Oil was also burdened by signs of rising supply from top producers, with Saudi Arabia and Russia both indicating they would provide enough oil to meet demand once U.S. sanctions hit Iran from next week.

The top three producers – Russia, Saudi Arabia and the United States – pumped 33 million barrels per day in September.

On Wednesday, oil prices declined as official data showed that U.S. crude stockpile data rose for a sixth straight week. WTI dropped 0.86 dollar to settle at 65.31 dollars a barrel, while Brent lost 0.44 dollar to 75.47 dollars a barrel.

The U.S. Energy Information Administration (EIA) said in its weekly report on Wednesday that the country’s crude oil inventories rose by 3.2 million barrels in the previous week, less than expected.

Meanwhile, U.S. gasoline stockpiles fell by 3.2 million barrels in the week, while distillate fuel inventories decreased by 4.1 million barrels, according to the EIA.

U.S. crude oil imports averaged 7.3 million barrels per day, down by 334,000 barrels per day from the previous week. U.S. crude oil exports averaged 2.5 million barrels per day, up by 305,000 barrels per day from the previous week.

The Dollar Index rose 0.12 percent at 97.1240 in late trading on Wednesday.

On Thursday, oil prices extended further losses, setting the decline on track for the fourth consecutive week, as global supply continued to rise from world’s major oil producers. WTI dropped 1.56 dollars to settle at 63.75 dollars a barrel, while Brent lost 2.07 dollars to 72.97 dollars a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) boosted oil production in October to its highest level since 2016, with the United Arab Emirates and Libya taking the lead.

Analysts believed that the supply increase has offset the negative impact and declines in Iranian shipments caused by new U.S. sanctions on Iran.

According to EIA’s latest Petroleum Supply Monthly report released on Thursday, U.S. monthly crude oil production reached 11.3 million barrels per day in August, making the United States the leading crude oil producer in the world. This is the first time that monthly U.S. production levels surpassed 11 million barrels per day level.

The higher crude oil prices at the end of 2018 and throughout 2019 will likely support increased U.S. crude oil production. EIA forecast that U.S. crude oil production will increase by 1.0 million barrels per day in 2019.

On Friday, oil prices continued to fall, as investors grew concerned over rising global supply and U.S. oil waivers from Iran sanctions. WTI dropped 0.55 dollar to settle at 63.14 dollars a barrel, and the Brent lost 0.08 dollar to 72.83 dollars a barrel.

Washington decided to re-impose sanctions against Iran, which had been lifted as part of the 2015 nuclear agreement, U.S. Secretary of State Mike Pompeo said Friday.

However, the United States will grant temporary waivers to eight “jurisdictions” from the sanctions on Iranian energy imports, according to Pompeo. Analysts believed that such moves increased uncertainty for the global oil market.

Oil market watchers have been closely monitoring the situation to determine how forcefully the Trump administration will enforce the sanctions. Some analysts are worried that the market will be unable to offset further expected declines in exports from Iran.

Imports of Iranian crude oil by major buyers in Asia hit a 32-month low in September.

Meanwhile, the market will focus on the news of any meeting between officials from China and the United States aiming at seeking solution to the ongoing trade tensions.