Oil Prices Drop As Supply Meets Global Economic Gloom

Oil Prices Drop As Supply Meets Global Economic Gloom

Marketmen said trading sentiment was dampened in futures trade here after oil prices retreated in the global market due to ample stocks. China's manufacturing growth slowed for the second straight month in October, dragged down by its trade dispute with the US.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $67.19 a barrel, down 40 cents, or 0.6 per cent.

Brent crude futures LCOc1 settled down $2.15, or 2.9 percent, at $72.89 a barrel, while USA crude CLc1 lost $1.62, or 2.5 percent, at $63.69, its lowest close since April 9.

Brent and USA crude posted their biggest monthly percentage decline since July 2016 in October, with Brent down 8.8 percent for the month and US crude losing almost 11 per cent.

Earlier in the session, Brent dropped to a session low of $75.09/Bbl, while WTI fell to $65.33/Bbl.

While U.S. drillers may take their foot off the gas a bit until new pipelines from the Permian Basin come on in 2019 and 2020, production is still heading higher.

A stronger US dollar made the dollar-priced commodity less attractive for holders of other currencies.

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Oil is also under pressure from rising output by the world's biggest producers, Russia, the U.S. and Saudi Arabia, which are helping to replenish global oil inventories after more than a year of stock draws.

Overall, however, oil has been caught up in broad financial market slumps this month, with stocks falling again on Monday after a report Washington was planning an additional $257 billion worth of tariffs on Chinese goods if upcoming talks between Presidents Donald Trump and Xi Jinping fail to end a trade war between the world's two largest economies.

At the start of today's session, traders will continue to monitor the developments between the USA and China, but the main focus will be on the developing oversupply situation in the markets.

"We think Trump will agree to China importing some volumes, similar to the treatment that India and South Korea receive", he said.

As of the latest OPEC-issued data, production in Iran was likely down to 3.4 million barrels in September.

That is an increase of 10 million bpd since the start of the decade and means the three producers alone now meet a third of global crude demand.

Clayton Allen of Height Securities said Iran's biggest oil customers, all in Asia, were seeking waivers to US sanctions against Iran's petroleum exports.