Brent crude takes its cue from falling stock markets

Singapore — Brent oil prices dipped on Tuesday, weighed down by ongoing weakness in global stock markets and by signs of rising global supply despite looming sanctions on Iran’s crude exports.

Front-month Brent crude oil futures were at $77.05 a barrel at 4.28am GMT, down 29c or 0.4 percent, from their last close.

US West Texas Intermediate (WTI) crude futures were firmer, however, at $67.16 a barrel, up 12c from their last settlement.

Oil has been caught up in broad financial market slumps this month, with stocks falling again on Monday after reports Washington was planning an additional $257bn 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.

High oil prices are hurting consumers and could dent demand, the executive director of the International Energy Agency (IEA) said on Tuesday.

“There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they’re directly related to consumer prices. The second one is global economic growth momentum slowing down,” said IEA chief Fatih Birol.

Oil was also being weighed down by signs of rising supply from top producers.

“A Saudi pledge to produce as much oil as possible, and the stock market rout, have sharply reduced concern about the November 4 implementation of US sanctions against Iran,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Russia has also indicated it will provide enough oil to meet demand once US sanctions hit Iran from next week.

In a sign that oil supply remains ample despite the looming US sanctions against Iran’s petroleum exports, crude output from the world’s top three producers — Russia, the US and Saudi Arabia — reached 33-million barrels a day for the first time in September, Refinitiv Eikon data showed.

That’s an increase of 10-million barrels a day since the start of the decade and means that these three producers alone now meet a third of global crude demand.

Hedge fund managers continued to liquidate former bullish positions in oil last week, with signs of short-selling appearing for the first time in over a year.

Despite that, Hansen said that, “given the yet unknown impact on Iran’s ability to produce and export (amid sanctions) … we could see some speculative buying emerge ahead of November 4.”

Iran’s seaborne crude exports, by contrast, have fallen from a 2018 peak of just over 2.5-million barrels a day in May to about 1.5-million barrels a day in September and October, Eikon data showed.

Reuters