Wednesday, 26 October 2016

Commodity Updates -- Crude Oil Prices Declining

Crude Oil Prices Declining on API Report and OPEC-Related Concerns
Crude oil prices continue to fall over OPEC drama and traders’ concerns over the expected production deal. Oil prices again declined below $50 a barrel during Tuesday trade, as oil traders were still doubtful about whether OPEC members can work out a deal or not. 
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Iraq’s retreat from either freezing or cutting their production raised several concerns over the deal and production quota for each member.  

Iraq says they also want exemption like Nigeria and Libya and needs more money to fight against the Islamic State militants. Iraq is the second-largest crude oil exporter among OPEC members and their retreat could have big consequences on the production deal, which is likely to be finalized at the next month’s meeting in Vienna.  

According to Chinese customs data, Iraq exported more oil to China than Saudi Arabia in the last month. Iraq’s increasing exports to China, which is Saudi Arabia’s biggest customer, raised several questions for Riyadh about what would happen if Saudi Arabia cut production, while Iran and Iraq kept raising their exports.

WTI crude oil declined around 1.1% to settle at $49.96 a barrel. Brent, the global benchmark, also declined 1.3% to settle around at $50.79 a barrel.   

On the other hand, swelling U.S. crude oil inventories also weighed on traders’ sentiments. The American Petroleum Institute reported a build of nearly 4.8 million barrels in U.S. crude oil inventories. API also reported a growth of 1.7 million barrels in gasoline stocks, while distillate inventories declined by 900,000 barrels.

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