Oil slips as Saudi and Russia quietly agree output rise
October 4, 2018
Oil prices on Thursday slipped from four-year highs reached the previous session, pressured by rising U.S. inventories and after sources said Russia and Saudi Arabia struck a private deal in September to raise crude output.
Brent on Wednesday hit a four-year high of $86.74 a barrel, lifted by expectations of a tightening market ahead of U.S. sanctions that will target Iran’s oil exports from next month.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 18 cents, or 0.2 percent, at $76.23 a barrel.
“Data for last week showed a much more significant than expected ... build in U.S. commercial crude (inventories), which generally suggests that oil prices should tumble,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
U.S. crude oil stocks C-STK-T-EIA rose by nearly 8 million barrels last week to about 404 million barrels, the biggest increase since March 2017, Energy Information Administration data showed on Wednesday.
U.S. weekly Midwest refinery utilization rates dropped to 78.9 percent, their lowest since October 2015, according to the data.
Russia and Saudi Arabia struck a private deal in September to raise oil output to cool rising prices , before consulting with other producers, including the rest of the Organization of the Petroleum Exporting Countries (OPEC).
Russia’s and Saudi Arabia’s actions come as markets have heated up ahead of U.S. sanctions against Iran’s oil sector, which are set to kick in from Nov. 4, and which many analysts expect to knock around 1.5 million bpd of supply out of markets.
The US Dollar Index Futures was up 0.19% at 95.10.