Growing US Oil Exports Make WTI Nearly 24-Hour Benchmark

Dwayne Harmon
October 22, 2018

Oil crept up on Thursday amid ongoing tensions over the death of a prominent Saudi journalist, with prices steadying after a big drop overnight due to a jump in USA crude stockpiles.

The report comes after Brent crude - which is used as a worldwide benchmark for oil prices - fell below $80, bottoming out Thursday at $78.69 a barrel.

Iran, facing USA sanctions on its oil exports from November 4, cut production by 376,000 bpd in September versus May, and has said OPEC and Saudi Arabia are not able to make up for a total loss of its exports.

The EIA report indicated a massive decline of crude exports by 1.8 million barrels per day, which is characterized as bearish by the agency.

The global price for oil plummeted on Wednesday, with the United States crude futures sinking below $70 per barrel, the first in this month, following the increase of the country's crude stockpiles by 6.5 million barrels, triple that of what analysts had originally forecasted.

Crude oil prices have kept rising since the beginning of the year, even managing to reach record highs that were last seen in November 2014.

USA lawmakers pointed at the Saudi leadership over the disappearance and suggested sanctions could be possible. "That comes after prices dropped sharply on Wednesday as us crude stockpiles surged more than what the market had expected".

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"Stocks are rising in the USA, and the reason is because pipes out of the US for exports are maxed out while USA production is rising", said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB.

US State Department officials have said that "There are no blanket waivers that will be issued for any one country", and any waiver under CAATSA "would require, among other things, countries to significantly reduce their reliance on Russian arms".

But those who are against the idea, say once we have not still resolved the problems and weaknesses in the stock trades, how can we set up a new proper ground for offering oil in this market?

On its part, India, the world's third-biggest oil importer, is facing record high retail prices after global crude price soared and rupee depreciated against the U.S. dollar.

Saudi Arabia and Kuwait will flounder to resume oil production from jointly operated fields that produced some 500,000 barrels per day any time soon due to operational differences and increasingly sour political ties, according to sources.

Continued weakness in global equities was also a weight on crude this week, analysts said, underlining worries about global growth prospects and dampening demand for assets perceived as risky, including most commodities.

Saudi Arabia has threatened to retaliate against potential sanctions from the United States over the disappearance of Washington Post journalist Jamal Khashoggi.

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