Tuesday , July 27 2021

The US is most likely responsible for many excess oil supplies: Citi



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Crude oil has experienced several devastating weeks. "Data-reactid =" 16 ">
Crude oil has experienced several devastating weeks.

Domestic crude posted a second straight day of losses Tuesday, slipping for the longest losing streak on record. The benchmark US settled strongly in the bear market region, down 27% after reaching a four-year high a few weeks ago in early October. The price of Brent crude oil also fell from several-year highs to the lowest market.

Analysts point to a network of interrelated factors for price reductions. Oil slipped as a locking move with a broader market selloff in mid-October, and a continued increase in production has renewed fears of a supply spike that is thinning prices.

But according to some analysts, the single party in charge of oil sales recently looked at Americans right in the face.

"The US may be responsible for a lot of oversupply," Citi analyst Edward Morse wrote in a note Wednesday. "This is pressing the Kingdom and Russia to add more oil while promising the most severe oil sanctions against Iran that have ever been implemented, but actually (imposed) relatively mild sanctions, exacerbating excess supply."

On November 5, the US again imposed sanctions on Iran's important energy sector, which had previously been lifted as part of the 2015 nuclear agreement. Oil prices rose in late August to early October to anticipate sanctions, even like Russia and Saudi Arabia – the two biggest exporters – continue to increase output since the beginning of the year.

Concerns about the impact of Iran's energy sanctions, however, have reduced substantially after the US announced it would provide temporary relief for eight countries, which allowed them to continue importing Iranian oil.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" This happens to the market with the relief given to eight markets Iran's purchases that the impact of sanctions will be much smaller than the market bet only two months ago, "Stephen Schork from the Schork report to Yahoo Finance last week. & nbsp;"data-reactid =" 23 ">" This happened on the market with the release given to eight Iranian purchasing markets that the impact of sanctions would be much smaller than the market bet only two months ago, "Stephen Schork of the Schork report told Yahoo Finance last week.

President Donald Trump quickly took credit for falling oil prices at a press conference last week, citing an exception to Iranian oil exports.

"I gave some countries a break on oil. I did it a little because they really asked for help. But I really did it because I didn't want to push oil prices up to $ 100 per barrel or $ 150 per barrel, because I pushed them down, "Trump said. "You have a monopoly called & # 39; OPEC & # 39; … and I don't like that monopoly."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Saudi Arabia and Russia have considered cutting output in the wake of a decline price, a move Trump condemned in the Tweet on Monday. "Hopefully, Saudi Arabia and OPEC will not cut oil production. Oil prices must be much lower based on supply, "Trump wrote. Russia is considering cutting as much as 1.4 million barrels per day,& nbsp; higher than previously anticipated. "data-reactid =" 26 "> Saudi Arabia and Russia have considered cutting output amid falling prices, a move Trump condemned Tweeted on Monday." Hopefully, Saudi Arabia and OPEC will not cut oil production. Oil prices must be much lower based on supply, "Trump wrote. Reuters reported Wednesday that Saudi Arabia and Russia were considering cutting as much as 1.4 million barrels per day, higher than previously anticipated.

For Morse, Trump's recent tweet about OPEC was "just one of many factors" made in Washington & # 39; behind a recent record at a lower price. "

The steam generator stands at Lake Christina, a half-oil production facility owned by Cenovus Energy Inc. and ConocoPhillips, in Conklin, Alberta, Canada, on Thursday, August 15, 2013. Cenovus Energy Inc. is the fourth largest oil producer in Canada. Photographer: Brent Lewin / Bloomberg through Getty Images

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The US must also be blamed for its more bearish on oil demand, Morse adding, rhetoric that focuses on China's economic weakness and the impact of trade war giving "into what is now seems to be excessive concern about demand growth in 2019 and beyond," he said. Data last week showed that crude oil imports in China jumped in October to a record 9.61 million barrels per day, from 9.05 million bpd in September. "US data-reactid = 39" is also to blame for rising bearish on oil demand, Morse added. Rhetoric focusing on China's economic weakness and the impact of trade war is feeding "into what now seems to be excessive concern about demand growth in 2019 and so on, "he said. This came even as customs data last week showed that crude oil imports in China surged in October to a record 9.61 million barrels per day, from 9.05 million bpd in September.

"There is a good chance that some trade-related fears will not materialize," Morse said.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The" final blow "for oil that has an impact on US prices has become an "extraordinary momentum" of supply growth, Morse said, US oil production has increased at an accelerating rate, reaching 11.6 million barrels per day earlier this month and catapulting the United States in front of Saudi Arabia and Russia as the world's largest oil producers. "Data-reactid =" 41 "> The final blow" for the US that has impact on oil prices has been "extraordinary momentum" from supply growth, Morse said, US oil production has increased at an accelerating rate, hitting 11.6 million barrels per days earlier this month and catapulted the United States ahead of Saudi Arabia and Russia as the world's biggest oil producers.

Despite these factors, Morse believes prices will change higher "long before" the end of the second quarter of 2019.

"Parts of this are physical, and some are financial," he said. "Winter shocks or unplanned disturbances at one of the producers" Fragile 5 ' [Iraq, Venezuela, Nigeria, Algeria and Libya ] can quickly see a bullish petroleum structure reappear. "

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Prices for December 18 contracts for US West Texas middleCL = F) rebounded slightly on Wednesday afternoon, up 1.76% to $ 56.67 a barrel at 12:26 a.m. ET. Brent crude (BZ = F) Prices rose 1.77% to $ 66.63 per barrel. "Data-reactid =" 48 "> Prices for the December 18 contract for West Texas US (CL = F) rebounded slightly on Wednesday afternoon, up 1.76% to $ 56.67 per barrel at 12:26 pm ET. Brent (BZ = F) prices rose 1.77% to $ 66.63 per barrel.

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Emily McCormick is a reporter for Yahoo Finance. & Nbsp;Follow him on Twitter: @emily_mcck"data-reactid =" 50 ">Emily McCormick is a reporter for Yahoo Finance. Follow him on Twitter: @emily_mcck

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