Published: Fri, November 02, 2018
Markets | By Noel Gibbs

Oil prices show weakness as Brent futures push 200-day average

Oil prices show weakness as Brent futures push 200-day average

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.

Hedge funds are still overwhelmingly long on oil and may have to liquidate positions if prices keep falling, accelerating a market sell-off, analysts say. Companies in some countries may also defy the sanctions and channel payments in a way that it avoids the US financial system.

Oil prices climbed for the first time in three days on Wednesday, rising around 1 percent ahead of the start of US sanctions against Iran next week and as stock markets clawed back some of the losses they racked up this month.

Both contracts have fallen roughly $10/Bbl from four-year highs reached during the first week of October.

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Front-month Brent crude futures, the global benchmark for oil prices, were at $72.86 per barrel at 0041 GMT on Friday, down 3 cents from their last close. US West Texas Intermediate (WTI) crude futures were firmer, however, at $67,19 a barrel, up 15 cents from their last settlement, bringing down the spread between the two main oil price benchmarks to below $10 per barrel.

Official U.S. data on inventories will be published at 10:30 a.m. EDT (1430 GMT).

Brent has declined from a 2018 high of $86.74 in early October amid growing concern over a possible slowdown in global growth as the U.S-China trade dispute heats up and hits emerging market economies in particular.

"Trade conflict between the USA and China could have a slowing effect on demand in the two largest consumer countries", a report by Commerzbank AG said.

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The International Energy Agency (IEA) said high oil prices were hurting consumers and could dent fuel demand at a time of slowing global economic activity.

With the top three producers at over 33 billion bpd, they are meeting close to a third of the world's nearly 100 million bpd of consumption.

Imports of Iranian crude by major buyers in Asia hit a 32-month low in September as China, South Korea and Japan sharply cut their purchases ahead of the sanctions, government and ship-tracking data showed.

On the supply side, however, oil markets remain tense ahead of looming USA sanctions against Iran's crude exports, which are set to start next week and are expected to tighten supply, especially to Asia which takes most of Iran's shipments.

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