Oil prices drop as supply declines

Oil prices drop as supply declines

According to EIA's latest Petroleum Supply Monthly, U.S. crude oil production reached 11.3 million b/d in August 2018, up from 10.9 million b/d in July.

Oil has been caught in the global financial market slump this month, raising concerns about global oil demand.

So, the market is betting on supply that may be there later but it is clear that it is not here now.

Oil prices are falling again, Friday, as concerns over short-term supply worries ease, despite the U.S. sanctions imposed on Iran. Still, U.S. crude oil futures prices lost 2.2 percent for the week, marking the third straight weekly loss. "Technically the market has been in a weak position", said Phil Flynn, analyst at Price Futures Group in Chicago.

A stronger dollar, higher interest rates and rising supply are all contributing to a softer oil price. While the Crude price crash may provide some hope that we may survive the Iranian sanctions, the reality is that we still have no margin for error and we still have significant upside price risks.

According to the data released by the U.S. Energy Information Administration, crude oil inventories increased by 3.22 million barrels in the week ended October 26, less than forecasts for an over 4 million barrels increase.

"We think Trump will agree to China importing some volumes, similar to the treatment that India and South Korea receive", he said.

But oil supply from other countries is rising.

USA crude oil production exceeded the Russian Ministry of Energy's estimated August production of 11.2 million b/d, making the United States the leading crude oil producer in the world.

Moreover, Saudi Arabia's Energy Minister Khalid al-Falih said on Tuesday that the Organization of the Petroleum Exporting Countries (OPEC) and its partners are in "produce as much as you can" mode.

While that action isn't expected to come, OPEC oil production did rise by 100,000 barrels per day during September through lower adherence to the output cap, amid fears over the impact of lower exports of Iranian oil.

Russian oil output has reached 11.41 million bpd, a level unseen since the collapse of the Soviet Union in 1991, an industry source told Reuters.

On Thursday, oil prices rose as investors were encouraged by a strong rebound in the US stock markets.

Reports said the White House was drafting a trade agreement to be taken up with Beijing during US President Donald Trump and China President Xi Jinping's meeting on the sidelines of the G20 Summit at the end of this month.

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