Oil Prices Recede from Four-Year Highs
Oil prices were lower during Thursday’s Asian trading session after hitting four-year highs on Wednesday. The drop was prompted by reports that Russia and Saudi Arabia made a private deal in September to raise crude outputs despite rising inventory in the U.S. Data out from the U.S. Energy Information Administration on Wednesday showed that U.S. crude oil stocks rose by nearly 8 million barrels last week to nearly 404 million barrels. U.S. crude oil production was published as 11.1 million barrels per day, a record high.
After hitting a high of $86.74 per barrel on Wednesday, Brent crude futures dropped to $85.85 before rising starting to rise again. As of 1:06 p.m. HK/SIN, Brent crude was trading at $86.15 per barrel. U.S. WTI futures were down 0.17 percent to $76.28 per barrel after rising more than $1 per barrel on Wednesday to a high of $76.41, a level not reached since November 2014.
Wednesday’s price increases came despite an announcement from Saudi Arabian Energy Minister Khalid al-Falih that the kingdom was pumping 10.7 million barrels per day and would raise output again in November.
Some traders are worried that oil’s price rally has been too fast and that a continued rise is unsustainable in the long term. Still, lingering uncertainty in the market is likely to keep pressure on oil prices in the near term, with some traders even considering the possibility of hitting $100 per barrel. Of specific concern is U.S. President Donald Trump’s deadline for oil sanctions on Iran, after which point he has demanded that no other country purchase oil from the world’s third-largest oil producer. Several countries have already curbed their purchases from Iran in an effort to maintain strong ties with the U.S. According to CNBC, a report by Goldman Sachs listed Iranian oil exports down to 650,000 barrels per day since April, surpassing expectations.