Published: Sun, February 11, 2018
Global News | By Stacy Ballard

Oil prices fall continues after Iran announced plans to boost production

Oil prices fall continues after Iran announced plans to boost production

The EIA's weekly data came on the heels of an upwardly revised forecast for total US production this year and next.

The U.S. increases have complicated efforts by OPEC and other producers, including Russian Federation, to force down excess global inventories by cutting output. Now, surging US exports - largely banned by Washington until just two years ago - challenge the last region OPEC dominates: Asia.

Until the early 2000s, the United States was oil starved, importing a peak of 12 million bpd.

Until recently, oil prices have been buoyed by production cuts from the Organization of the Petroleum Exporting Countries and other large producers among other threats to supply. US output rose to 10.25 million bpd in the most recent weekly figures, which if confirmed would represent a record.

US stocks eventually rebounded in volatile afternoon trading on Tuesday. Few expected China to become a major buyer. Brent was heading for a weekly loss of almost 8 percent; US crude was on track for a 9 percent weekly drop. Additionally, half a million tonnes of US liquefied natural gas (LNG) worth nearly $300 million, headed to China from the U.S.in January. "There's still some trepidation on the supply side and will USA shale growth overwhelm the strong demand that we expect this year?"

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"With the Trump administration, the pressure on China to balance accounts with the U.S.is huge".

The news that the line will reach full rates over the weekend intensified oversupply worries, said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

"We see USA crude as a supplement to our large base of crude" from the Middle East and Russian Federation, said a refinery manager for China's oil-major Sinopec, declining to be named as he was not cleared to speak to media.

During the previous session, the price of oil touched a one-month low and wiped out most of the cumulative rise since the beginning of the year. "That's a bit of a drag on oil prices as well"'. Thanks to the shale boom, USA crude is cheaper than oil from elsewhere. This could drive prices to $58.50 today.

Oil prices fell further Friday as investors continue to worry about a surge in USA production and the selloff in equity markets.

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The flood of USA oil may even change the way crude is priced.

"Crude was acting like a puppet with the equity markets and dollar acting as the puppeteer", said Brian LaRose, senior technical analyst at ICAP.

"The U.S. can not stop producing", according to analysts at consultancy JBC Energy.

On Wednesday, the U.S. West Texas Intermediate traded 2.5% down to $61.79 per barrel to a one month low and has gone down by more than 5.6% this week alone. "Everybody is itching to produce more oil", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.

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