Oil on track for longest weekly losing streak in 29 years

Oil on track for longest weekly losing streak in 29 years

Brent oil declined 40 cents at $46.22 a barrel, while the US crude for October delivery was 30 cents lower at $41.02 a barrel, Reuters reported. Till July, the longest global oil glut was estimated to save India close to Rs 1.5 lakh crore, or roughly $24 billion, in 2015-16.



Oil prices dived as a US government report showed that the crude stockpiles of last week increased unexpectedly.

The U.S. has doubled its production since 2009, and that extra output has to go somewhere.

“Once we get below 40 which many see as a psychological barrier, theoretically there is no low point where we say ‘that’s where oil prices will stop, ‘” Pyle said. If U.S. oil output continues to fall, Saudi Arabia might be induced to reduce their production levels, which could trigger a price rebound.

What may be pushing prices this low, and possibly lower, is a steady drumbeat of economic data out of China suggesting that the world’s second largest economy is slowing.

Angola plans to ship 1.83 million barrels a day in October, the most since November 2011, according to a preliminary loading program obtained by Bloomberg.

Faced with losing market share to the frackers in North America, it appeared that the members of the Organisation of the Petroleum Exporting Countries (Opec) which had previously ruled world oil markets nearly unchallenged had little choice but to trigger a price war that would weed out rival high-cost producers. In Texas’ Permian basin and in the Persian Gulf, that cost is around $10 to $20 a barrel, he noted. Analysts say gas prices could drop below $2 a gallon in many areas of the country later this year.

“It’s just continuing the hemorrhaging of crude oil prices in a market that is overwhelmed with bearish news”, said Andy Lipow, president of Lipow Oil Associates in Houston. Puts give the holder the right, but not the obligation, to sell NYMEX crude futures at a predetermined strike price. Iraq, facing instability from the ongoing fight with ISIS, has also seen its problems compounded by the fall in oil prices, causing its budget to shrink significantly. If passed, the Iranians could export as much as one million barrels per day.

The oil market is also headed into a time of year when prices tend to decline for seasonal reasons. If the ban is lifted and the United States increases its oil production by 3.3 million barrels per day between 2015 and 2035 – an estimate that’s on the high end of predictions – burning that oil will release more than 515 million metric tons of carbon pollution every year. “Reaching $40 for a week, two weeks or one month is going to do nothing”.

Although China’s crude demand has so far remained strong as authorities take advantage of cheap oil to build up strategic reserves and consumers kept spending despite the slowing economy, there are signs of weakening, with the devaluation of the yuan potentially denting fuel imports.

The kingdom raised $5bn on the bond markets this month for the first time in eight years.

Tensions within the group have risen further since Iran sealed a historic nuclear deal with world powers, which could lead to the lifting of sanctions and potentially more Iranian crude entering an already oversupplied market.

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