Oil drops as rising global supply forces price U-turn

A Chinese vessel approaching beleaguered Iranian tanker Sanchi to help extinguish a fire that started after it collided with a Chinese vessel off China's shores

The Bank continues to remain supportive of oil price from current levels as the risks are skewed to the upside in the presence of United States sanctions on Iran and rising geopolitical risks globally.

West Texas Intermediate crude for December delivery traded at US$61.79 (RM258.28) a barrel at 4.38pm in New York after ending the session at US$62.21 on the New York Mercantile Exchange, the lowest close since April 6.

Oil prices slipped on Wednesday, continuing a recent slide after surging US crude output hit another record and domestic inventories rose more than expected.

Crude oil prices fell Tuesday, briefly entering bear market territory, after the USA said it will allow some of Iran's biggest customers to continue importing the Opec member's crude without violating reinstated US sanctions.

His comments came after the deputy head of Iran's Revolutionary Guards, Brigadier General Hossein Salami, said that his country can flourish under sanctions and would defeat the United States in the economic war.

"A slowdown in the global economy remains the key downside risk to oil", Bernstein said.

The EIA report showed domestic crude production jumped to 11.6 million barrels per day while stockpiles at Cushing, Oklahoma, increased by 2.42 million barrels.




The decline in oil prices over the past weeks follows a rally between August and October when crude rose ahead of the re-introduction of sanctions against Iran's oil exports on November 5.

India Friday welcomed the United States announcement allowing it to keep buying crude oil from Iran and said it was examining the details of the exemptions.

On Tuesday, the U.S. Energy Information Administration revised its outlook for American oil production for 2019.

Russia's TASS news agency, citing an unnamed source, reported that Russian Federation and Saudi Arabia - the biggest producers in an Opec-led alliance that has been limiting supply since 2017 - had started bilateral talks on curbing supplies. The Trump administration restored sanctions on Iran, OPEC's third-biggest oil producer, on Monday. In addition, having initially talked of choking off Iranian shipments to zero, the U.S. waiver decision is expected to limit the fall in Iran's exports.

Both Brent and WTI have declined by around 20 percent from the four-year highs they reached in early October.

Also Thursday, Iran's representative to OPEC, Hossein Kazempour Ardebili, claimed that Russian Federation and Saudi Arabia were helping Trump by increasing their own production to keep oil prices low. "Opec and Russian Federation may use cuts to support US$70 per barrel", said Ole Hansen, head of commodity strategy at Saxo Bank.

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