Wary Investors Push Oil Prices Back Down

Offshore platforms at the Bouri Oil Field off the coast of Libya File

The 14-nation oil cartel, led by Saudi Arabia, accounts for almost 44 percent of the world's crude oil production.

Oil extended losses near US$50 a barrel as U.S. industry data showed an increase in petrol stockpiles and a boost in crude inventories at the nation's biggest storage hub. "Finally, the market is recognizing that these draws in inventories of products and crude oil combined are for real and they're going to last through the end of the year".

Investors became cautious after a solid third-quarter gain.

For sure, US oil production has failed to grow significantly this year, with output in June at 9.1 million barrels a day, only marginally higher than 8.9 million barrels a day in January. U.S. WTI futures were down 0.19 percent to $51.57 per barrel, while Brent crude futures were down 0.32 percent to $56.63 per barrel as of 2:06 p.m. HK/SIN. That surged to more than 1.98 million barrels a day last week.

The Organization of the Petroleum Exporting Countries, Russia and other producers agreed to cut their combined oil production by nearly 1.8 million barrels per day from January in a bid to reduce a supply glut that had driven down prices. Prices climbed 9.4% in September, the biggest monthly increase since April 2016. Seasonal norms were upended in late August when Hurricane Harvey hit the large concentration of refineries in the U.S. Gulf Coast and the sector was further interrupted when Hurricane Irma hit Florida, which has no refineries of its own. Gains in rig counts, which measure exploration and production activity, usually indicate drillers are returning to work on improved market metrics. And OPEC members that are exempt from the deal have also ramped up production. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Rigs targeting crude in the US increased by six last week, bringing the total to 750, according to Baker Hughes data reported Friday.

Elsewhere, Libya's Sharara oil field was shut on a force majeure.

Oil prices had their best quarter this year in the three months to September, while gold eked out a small rise, despite a negative performance for the week.

"Oil is under pressure because of the dollar", Phil Flynn, senior market analyst at Price Futures Group wrote his daily energy report.

"We have updated our base-case price assumptions to reflect the limited upside for prices in the long term".

However, a recent Reuters poll suggests OPEC oil output rose some 50,000 per day during September.

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