Oil Monthly Forecast - November 2018

An Iranian warship

China - the leading importer of Iranian oil - is still in discussions with the USA on terms, but is among the eight countries set to receive a waiver, according to two people familiar with the discussions who also asked not to be identified.

Structurally oil prices remain bearish as the Brent curve moves deeper into contango (Spot price lower than forward price).

Yet over the past 20 trading sessions, oil and stocks both peaked in early October and both have lost almost 10 percent through the end of the month.

The worldwide oil benchmark, Brent crude, fell by more than two per cent on Tuesday on signs of rising supply and concerns that global economic activity and fuel demand would be hit by a deepening United States-China trade dispute. Meanwhile, India and South Korea were said to agree with the USA on the outline of waivers from sanctions to keep importing some Iranian oil.

Meanwhile, US crude oil production surged by 416,000 bpd to a record 11.346 million bpd in August, the US Energy Information Administration (EIA) said in a monthly report this week.

"One discussion that is developing is that (trade tensions) are hurting demand for crude oil".




The draw in gasoline and distillate inventories this week is unlikely to take the sting out of such high crude oil and Cushing inventories, and by 4:40pm EDT, WTI was trading down at $66.19 and Brent was trading down at $76.04.

Mr Trump said he would like to make a deal now but that China was not ready. West Texas Intermediate (WTI) crude futures fell 46 cents to $65.01 a barrel.

Four major Asian buyers of Iranian crude imported a total of 1.13 million barrels per day (bpd) from Iran in September, the data released by Reuters showed.

If the reports of a waiver are untrue and all of Iran's oil output is sanctioned by the US, then it could be a problem for the global oil market, he said.

But oil supply from other countries is rising. Figures suggest recent United States oil production levels have surpassed that of Russian Federation. WTI lost 2.93 US dollars to settle at 66.43 dollars a barrel, and Brent sank 3.39 dollars to 76.44 dollars per barrel. Grisanti is watching for WTI to break above its 200-day moving average at $67.47 for a rebound. "I would categorize this as a seasonal build as the extended driving season is finally over heading into the North American Time zone change this weekend", John Thorpe, a commodity broker at Los Angeles-based Cannon Trading, told UPI.

The market could get some clarity next week, when sanctions on Iran's energy industry go back into full force.

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