Oil steady as emerging market woes dim demand outlook

Marco Green
August 14, 2018

On Monday in its monthly oil market report, OPEC announced crude production was up in July, despite sliding output in Libya and Venezuela, with the price of oil staying essentially the same in July as it was in June.

General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018.

Brent crude futures fell $1.67, or 2.3 per cent, to $71.14 a barrel, by 12:29 p.m. EDT.

US West Texas Intermediate (WTI) crude futures were up 32 cents, or 0.5 percent, at $67.52 per barrel.

Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries, behind Saudi Arabia and Iraq, pumping 3.65 million bpd in July, Reuters data show.

OPEC itself, using secondary sources, estimated in a report published on Monday that Saudi production was at a slightly higher level of 10.39 million bpd last month. Brent, the global benchmark, shed 0.3% to $72.74 a barrel.

The United States will seek to block Iran's global oil sales from November 5, when the second phase of sanctions are reimposed as part of Washington's withdrawal from the 2015 nuclear deal.

OPEC expects oil supply by countries outside the cartel to increase by 2.13 million bpd next year, 30,000 bpd more than forecast last month, with much of the increase coming from new USA shale production.

"The direct impact on global demand for oil is negligible", Fritsch said.

Iran is selling oil and gas at a discount to Asian customers as it prepares for the return of U.S. sanctions, state news agency IRNA reported on Tuesday. It has also dented emerging market stocks while curbing growth and the outlook for oil demand.

Opec has revised down its forecast oil demand growth by 20,000 barrels a day from last month's report, to 1.64 million barrels a day this year.

Signs of slowing economic growth and lower fuel demand increases, especially in Asia's large emerging markets are weighing on the oil markets.

Beyond the darkening economic outlook, Phillip Futures said hedge funds had reduced bullish bets because of "rising production levels from OPEC and the United States".

Other reports by Click Lancashire

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