Oil prices rebounded after two consecutive days of losses on Wednesday, but market remained under pressure due to mounting supply and concerns over the outlook for demand amid the US-China trade war.
International benchmark Brent futures for January delivery rose 0.9 percent to $76.68 a barrel, after falling 1.8 percent and hitting its lowest since August 24 of $75.09 per barrel on Tuesday.
December contract US West Texas Intermediate (WTI) crude futures climbed 0.6 percent to $66.61 a barrel. Crude WTI declined 1.3 percent in the previous day, after reaching its lowest since August 17 of $65.33 per barrel.
Both benchmarks have lost about $10 a barrel from 4-year high touched in the first week of October, and are heading for their worst monthly performance since July 2016.
Referring to Brent prices, Oil Risk Manager Tony Nunan said everyone thought they were going to go into the $90s, but now they are going for the $60s.
Rising Supply, Demand Concerns amid Trade War
Oil has been hit by the global financial market decline this month, with stocks weighed down by trade conflict between the US and China.
US President Donald Trump stated on Monday that he thinks there will be a great deal with China on trade but cautioned that he has billions of dollars worth of new tariffs ready for implementation if an agreement is not reach.
Trump said he would like to seal a deal now but China was not ready. The President did not elaborate.
The US has already levied duties on $250 billion worth of Chinese products, and China has responded with retaliatory tariffs on $110 billion worth of US goods.
In a bearish signal, the American Petroleum Institute reported US crude inventories added 5.7 barrels last week, higher than analysts’ expected 4.1 million barrel increase.
Investors will look to official government data on US inventories due to be released later in the day.
A financial data firm showed crude output from Russia, the US, and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, adding 10 million bpd since the beginning of the decade and means the three producers alone now account for a third of global oil demand.
US sanctions on Iran’s crude exports, is set to be impose from next week, and exports from the third biggest producer in the Organization of the Petroleum Exporting Countries (OPEC) have already started to weaken.
The country’s oil exports tumbled by about a third in the five months to September, dropping around 800,000 bpd. Iran is expected to lose 100,000 bpd in October, according to estimates from a tanker-tracking firm.
Saudi Arabia and Russia has pledged to increase production to offset losses in Iranian exports that could result from the sanctions that will take effect next week.
After recent losses in oil prices, Nunan said this is not the time to back off, if Trump wants to put the screws on Iran.
Imports of Iranian crude by key buyers in Asia marked a 32-month low last month, as China, South Korea, and Japan sharply reduced their purchases ahead of the sanctions on Iran.
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