Bearish Sentiment Returns To Oil Markets

Bearish Sentiment Returns To Oil Markets

Bearish Sentiment Returns To Oil Markets

Petroleum prices slumped to two-week lows on Thursday as global stock markets fell, as a report, showing US crude inventories rising more than expected, weighed on investor sentiment.

The West Texas Intermediate (WTI) for November delivery picked up 0.37 US dollar to settle at 71.34 dollars a barrel on the New York Mercantile Exchange on Friday.

Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.inventories and fading concerns for now about looming United States sanctions aimed at cutting Iran's oil exports.

Drillers added eight oil rigs in the week to Oct 12, bringing the total count to 869, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

The International Energy Agency said in its monthly report that the world's spare oil production capacity was already down to only 2 percent of global demand, with further reductions likely to come.

Wall Street extended its slide into a sixth session and a global equity index fell to a 1-year low on Thursday as investors feared an escalating USA trade war with China and risks from a recent climb in interest rates.

Now, with data showing Chinese exports to have registered a double digit growth in the month of September, despite escalating trade tensions with the USA, concerns about demand growth have eased a bit.

The monthly report from the Organization of the Petroleum Exporting Countries showed the 15-nation producer group's output rose by 132,000 bpd in September to almost 32.8 million bpd.

The estimated growth in global demand has been reduced by 110,000 barrels per day for each of the two years.

"Oil bulls are bearing the brunt of another bruising session as yesterday's selling frenzy intensifies", said Stephen Brennock, analyst at London brokerage PVM Oil. US Gulf of Mexico producers have cut oil output by 32 per cent and natural gas production by 13 per cent as a result of the lingering effects of Hurricane Michael, the Bureau of Safety and Environmental Enforcement (BSEE) said on Friday, citing reports from 27 companies.

Michael made landfall in Florida on Wednesday as the third most powerful hurricane to strike the USA mainland, though it has since weakened to a tropical storm.

"The increase in net production from key suppliers since May of approximately 1.4 million bpd, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million bpd in 2Q18 and look likely to have done the same in 3Q18, lends weight to the argument that the oil market is adequately supplied for now", the IEA said.

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