Crude oil rises but glut keeps lid on gains

[O/R] US crude CLc1 settled down 1 percent at $46.14 a barrel while Brent crude LCOc1 settled down 1.6 percent at $48.79.

Analysts said there were also shifts taking place within the markets of different oil products.

State oil firms Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and Qatar Petroleum did not respond to enquiries. “It will have a negative impact on the market and prices if no real measures are taken”.

Venezuela, which has been advocating coordinated action on oil production to support prices, advanced the idea of agreeing an “equilibrium” global oil price target of $88/barrel at a closely watched technical meeting between a number of OPEC and non-OPEC producers in Vienna October 21. “Iran may be able to increase oil production by one million barrels per day only after few years”, said a U.S. expert who asked to remain anonymous. Global consumption of crude will continue to grow while output from non-OPEC countries will decline next year, helping to bring the market toward equilibrium, he said. Today we stand to say that next year will be another bad one for the oil prices, but we should not be that pessimistic.

Stressing the need to form a joint venture with foreign companies for marketing purposes, Zanganeh stated: “West Karun oil field is Iran’s priority for the development of the country’s oil industry”.

However, it added that even in the USA there are indications that production could rise.

“Likewise, industrial-led diesel demand growth is ebbing as consumer-led gasoline growth stays strong …” Among the 12 members of OPEC, production is predicted to increase only in Iran and Iraq. Most of the loss in US output has come from the Eagle Ford in South Texas, which has shed over 227,000 barrels per day in output since April. Over the last several months, Russian Federation has stubbornly refused to cut output in an effort to defend its market share.

In the U.S., the oil rig count dropped to its lowest since June 2010, data showed on Friday, adding to speculation that domestic crude production will fall in the coming months, providing possible respite for oil prices.

“Such high distillate storage utilization has two precedents, leading in both cases to storage capacity running out in the springs of 1998 and 2009, pushing runs and crude oil prices and timespreads sharply lower”, said the bank in its recent report.

The share price of Occidental Petroleum Corporation(NYSE:OXY) was up 0.55% from the previous closing rate.

“We see a risky complacency regarding the ongoing physical surplus”.

But he noted that the direction could easily change as more US companies are due to report earnings and investors await a key jobs report this week.

Money managers’ short position in WTI crude jumped 24 per cent in the week ended October 27, according to data from the Commodity Futures Trading Commission.