Dubai, London – AFP, Reuters
55 minutes on 5 November 2018
– Last updated in
4 November 2018 / 21:26
The strong upward trend in oil markets over two years faces the strongest test in the coming months as supply surpluses and growing fears of economic weakness are disrupting global demand.
Crude prices were above $ 75 and $ 85 a barrel just a month ago, but US crude futures and Brent crude are currently facing an almost unsustainable sell-off.
For some time, prices have been supported by hopes that the re-imposition of US sanctions on Iran would lead to market exits.
But last week, three of the world's top three producers – Russia, Saudi Arabia and the United States – indicated they were pumping at record levels or near record levels, while the United States said it would allow exemptions for customers to continue importing Iranian oil, weakening the threat of a crisis. Supplies.
These factors, together with the recent weak economic data from China and other emerging markets, have turned the tide back into fears of inflation and pushed US crude futures to low levels since April and stalled the uptrend that found steady support during Periods of slight decline.
The US crude futures curve has for months hinted at tight supply prospects, but futures are predicting that investors believe oil could overwhelm markets in the coming months.
"The recent decline indicates that global demand is weaker than expected due to the fee issue, especially between the United States and China," Ritterbusch & Co. chairman Jim Ritterbusch said.
The market has also witnessed the exodus of speculators. In the past two weeks, net bets on price hikes have fallen to their lowest level in more than a year, and the sell-off accelerated last Thursday to bring the WTI down to $ 65 a barrel, a level that had maintained previous waves of selling during the summer and fall.
The oil market rose in anticipation of the United States again imposing sanctions on Iran this week, and fears that supplies from producers may not suffice to compensate for the shortfall.
Some analysts believe the current downturn is too much and that it has happened very quickly and producers in the Organization of the Petroleum Exporting Countries (OPEC) will not be able to add supplies when needed, especially as the threat continues to be felt in Iran, Venezuela and Libya.
OPEC production rose to levels not seen in two years. US production hit a record 11.3 million bpd in August, and Russia's output rose to 11.4 million bpd, the highest level of the post-Soviet era.
Six months after US President Donald Trump announced his country's withdrawal from the nuclear deal, the United States is resuming its second round of sanctions after reaching an agreement with Tehran in 2015.
Analysts expect Iran's oil exports, estimated at 2.5 million bpd, to fall by one million to two million barrels per day when sanctions come into effect.
The attention is directed to Saudi Arabia as a producer with an important spare capacity, estimated at two million barrels, may resort to to compensate for the lack of markets.
The UAE and Kuwait could also increase their production by 300,000 barrels if needed.
"The real rise is Iraq, which exports 4.2 million barrels a day, an amount that has never been seen before," said Samir Madani, an analyst at Tanker Tracks.