Oil slips after industry reports larger than expected U.S. build

Oil slips after industry reports larger than expected U.S. build

Oil slips after industry reports larger than expected U.S. build

USA crude futures fell 54 cents to settle at $61.67 a barrel, almost 20 percent below a peak close of $76.41 a barrel in early October.

US West Texas Intermediate (WTI) crude futures were at US$61.95 per barrel, up 28 US cents, or 0.4 per cent, from their previous settlement.

Even with US sanctions on Iranian oil in place, the perception among investors is that there is more than enough supply to meet demand, as reflected by the front-month January Brent futures contract trading at a discount to February.

Oil, which closed at a seven-month low in NY on Tuesday, slipped further after an industry report was said to show a larger-than-expected increase in U.S. crude inventories.

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

China and India were the largest markets for Iranian crude before the onset of sanctions and will remain such for the upcoming six months.

Those eight countries are Iran's biggest customers and account for around three-quarters of the Islamic Republic's oil exports.

India Friday welcomed the USA announcement allowing it to keep buying crude oil from Iran and said it was examining the details of the exemptions. On Wednesday, oil slipped after US crude output hit another record and domestic inventories rose more than expected.

US output meanwhile reached a new record high of 11.6 million bpd in the latest week and the country has now overtaken Russian Federation as the world's largest oil producer.

China's October crude imports surged 32 per cent from a year earlier to 40.80 million tonnes, or 9.61 million barrels per day (bpd), data from the General Administration of Customs showed on Thursday, climbing from 9.05 million bpd in September.

Still, analysts think the scenario will change now that the mid terms are over: Joe McMonigle, analyst at Hedgeye, stated in a note, "OPEC was feeling the Trump pressure but producers took action with the thinking that they just needed to get past the USA election".

Oil prices also fell on an abundance of oil stored in the United States. Pledges by other producers such as Saudi Arabia to pump more and record American supply as well as rising stockpiles also weighed on prices.

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. Pressure from the U.S.to lower prices probably will decrease now that the nation's midterm elections are over, Saxo Bank's Hansen said.

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