Oil Falls on Gloomier Economic Forecast

Posted by Joseph Keefe
Monday, October 29, 2018

Fund managers cut bullish crude holdings to 15-month low.

Oil prices fell on Monday, as concern over the global economy put crude on track for its biggest monthly fall since mid-2016.

Brent crude oil futures were down 34 cents at $77.28 a barrel at 1005 GMT, while U.S. crude futures fell by 30 cents to $67.29.

Even with U.S. sanctions on Iranian exports due to come into force in under a week, oil has lost nearly 7 percent in value this month, the largest percentage decline since July 2016.

Industrial commodities such as crude and copper have been rattled by hefty losses in global equities due to concern over corporate earnings, fears over economic growth amid escalating trade tensions, and a stronger dollar.

"It is often said that when stock markets sneeze, commodities catch a cold. This adage was on full display last week as a global rout on equity gauges dragged the energy complex lower," PVM Oil Associates strategist Stephen Brennock said.

"Adding a further tailwind to the prevailing selling pressures are mounting concerns of a budding oversupply. Saudi Arabia and Russia are leading efforts to keep oil markets well supplied at the same time as the demand outlook darkens ... The Iranian factor has been put on the back burner and bullish blood will continue to be spilled in the oil market."

Fund managers have cut their bullish positions in crude futures and options for four weeks in a row to their lowest since July 2017, as the demand outlook grows more uncertain.

Data from the InterContinental Exchange and the U.S. Commodity Futures Trading Commission shows combined bullish holdings of Brent and U.S. crude futures and options have fallen by a third in four weeks, to around 572 million barrels.

This position was equivalent to nearly 1.2 billion barrels in January.

"The market is likely to focus its attention more on fundamental data again, especially with respect to possible supply bottlenecks in the coming months given that strict U.S. sanctions on Iranian oil exports will come back into force from next week," Commerzbank analysts wrote.

On the supply side, Iran has started selling crude to private companies via a domestic exchange for the first time, the Oil Ministry's news website reported.

With just days to go before renewed sanctions take effect, three of Iran’s top five customers – India, China and Turkey - are resisting Washington’s call to end purchases outright, arguing there are not sufficient supplies worldwide to replace them, sources familiar with the matter said.


By Amanda Cooper

Categories: Finance Energy Offshore Energy Shale Oil & Gas

Related Stories

Mitigate SCC & HE to Keep Offshore Metal Structures Ship Shape

India Stretches Bids Deadline for 13 Offshore Deep-Sea Mineral Blocks

ADNOC Signs 15-Year LNG Supply Deal with Osaka Gas for Ruwais Project

BP to Help Boost Oil and Gas Output at India’s Largest Producing Field

Saipem’s Castorone Vessel on Its Way to Türkiye’s Largest Gas Field

Flare Gas Recovery Meets the Future

The Five Trends Driving Offshore Oil & Gas in 2025

Offshore Service Vessels: What’s in Store in 2025

AI & Offshore Energy: The Higher the Stakes, the More Value AI Creates

Floating LNG Conversion Job Slips Out of Seatrium’s Hands

Current News

Mitigate SCC & HE to Keep Offshore Metal Structures Ship Shape

India Stretches Bids Deadline for 13 Offshore Deep-Sea Mineral Blocks

Indonesia Awards Oil and Gas Blocks to Boost Reserves

Sapura Energy Nets $22.6M in Offshore Support Vessel Contracts

CNOOC Puts Into Production New Oil Field in South China Sea

Sunda Energy Starts Environmental Consultation for Chuditch-2 Well Drilling Plans

Pakistan’s OGDC to Start Production at ADNOC’s Offshore Block by 2027

Petrovietnam, Petronas Extend PSC for Offshore Block

Sapura Energy Scoops Close to $9M for O&M Work off Malaysia

Hanwha Ocean Marks Entry into Deepwater Drilling Market with First Drillship

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com