Inventory relief but global crude glut maintains price pressure

USA crude briefly dipped below $40 a barrel after that report and did so again early Thursday, when it dropped as far as $39.89 a barrel on the NY Mercantile Exchange, its lowest price since August.

An OPEC delegate from a Gulf oil-producing nation said he believed that oil prices could gain a few support in the medium term from rising tensions, particularly if the worldwide community steps up measures to reduce oil smuggling and hits oil facilities under Islamic State’s control in Syria and Iraq.

Today at 15:30 (GMT) will be published data which may determine the future path of crude oil.

Iran produced 3.4 million barrels per day of petroleum and other liquids in 2014.

If you are in a position, you should have your finger on the pulse …

“The market is actively seeking storage solutions”, Jefferies said, but with January 2017 prices now trading around $6 a barrel above those for January 2016, the spread is too low to make floating storage attractive as freight costs still have to be included.

Big oil suppliers have started requiring prepayment when selling cargoes of crude and refined products to Venezuela’s PDVSA, a bid to curb potential risks from the state-run company’s well-known cashflow woes, sources involved in the deals told Reuters.

Money managers cut their net long USA crude futures and options positions to the lowest in three months during the week to November 10, the US Commodity Futures Trading Commission (CFTC) said on Monday.

Part of the reason for the negative outlook on oil stems from concerns about demand from China, but a Nomura report called such fears “overdone” and said China’s oil imports are expected to remain robust heading into 2016. The gain followed an over $1 fall during the previous session.

“We needed a strong draw [in crude stockpiles] to stop the slide” in prices, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.

“We expect that inventories will build counter-seasonally (stocks usually fall in winter) in 4Q15 and that the market will remain oversupplied through 1H16”, it added. Oil settled at $40.75, but it’s still down 13% this month.

According to recent estimates, OPEC mined approx 31.54 million barrels a day in last month, close to record-highs, as major producers led by UAE focused on defending market share by keeping production high.

Iraqi output fell to 3.65 MMb/d as several days of poor weather conditions in the northern Gulf resulted in lower volumes being exported from the southern terminals and a build-up in stocks.