Oil posts biggest weekly loss in 5 months over equities

Jermaine Castillo
October 16, 2018

"This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy", the Paris-based IEA said.

Expensive energy, including the prices of oil, gas and coal at "multi-year" highs, pose a threat to economic growth worldwide, particularly to emerging market economies that are also seeing depreciations of their currencies, the International Energy Agency said Friday. Brent crude futures edged up 13 cents to $80.39 a barrel by 0042 GMT. In this Report, our revised demand outlook reflects these concerns: growth in both 2018 and 2019 will be 110 kb/d lower than our earlier forecast.

Oil climbed to a four-year high above $85 a barrel in London last week on concern that looming US sanctions on Iranian crude exports will leave markets short of supply later this year.

Both contracts remained headed for the first weekly drop in five weeks, pressured by a big rise in US inventories and fading concerns about shrinking global supplies due to looming USA sanctions on Iran's oil exports.

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Such disclosures from a respected agency, combined with persistent signs throughout this week that the crude industry could compensate for losses of Iran exports without incurring undue tightening, seemed to baffle media that for the past few months had been predicting calamity due to the US sanctions against the Islamic republic.

Global benchmark were at $74.63 per barrel at 0422 GMT, down 18 cents, or 0.2 percent, from their last close.

Drillers added eight oil rigs in the week to Oct 12, bringing the total count to 869, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

The International Energy Agency said in its monthly report that the world's spare oil production capacity was already down to only 2 percent of global demand, with further reductions likely to come.

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Members of the Organization of the Petroleum Exporting Countries (OPEC) and other exporters such as Russian Federation agreed in June to raise output as the market appeared increasingly tight.

The output increase from the second quarter was led by OPEC, which boosted production by 500,000 barrels a day, and the Americas, which saw a rise of 400,000 barrels a day.

A drop in United States oil production also lent prices some support. In the U.S. Gulf of Mexico, companies cut output by 40 per cent on Thursday because of Hurricane Michael, even as some began returning crews to offshore platforms. Official statements from Saudi Arabia suggest that October exports are back to the high levels seen in June and that more oil is available for those who wish to buy it.

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