Published: Mon, October 22, 2018
Business | By Pearl Harrison

Commodities - Oil Rises, Gold Drops on Saudi Concerns

Commodities - Oil Rises, Gold Drops on Saudi Concerns

WTI crude oil settles -1.6% to a five-week low $68.65/bbl, notching a two-day loss of 4.5% following data showing a fourth straight weekly increase in USA crude inventories; Brent -0.6% at $79.58/bbl.

Brent crude, the global benchmark, was down $1.07 at $78.98 a barrel at 1330 GMT.

The price of Brent crude stands at about $84 per barrel, after having risen to $86 per barrel, as the November 5 deadline for imposition of USA sanctions against Iran's oil trade in the world comes closer, raising serious concerns in oil markets.

Daily exports dipped to 2.3 million barrels in July and eventually slumped to around 1.6 million in September, according to estimates from Societe Generale.

US crude stocks rose 6.5-million barrels last week, the US Energy Information Administration said on Wednesday, the fourth consecutive weekly build and nearly triple what analysts had forecast. In 2017, the South purchased 147 million barrels of Iranian oil.

President Donald Trump on Thursday acknowledged for the first time that dissident journalist Jamal Khashoggi is likely dead and saw there would be “very severe” consequences if it was determined that Saudi rulers were behind it, without specifying what they would be.

Weekly Petroleum Status Report was a complete shocker sending Oil markets spiralling lower amidst some concerning development for Oil bulls,  said Stephen Innes, head of trading APAC at OANDA in Singapore.

At a meeting last month, the cartel and its allies debated how much they should open up their spigots to make up for Iranian oil exports, which will fall under a USA ban next month.

"Stocks are building", said Olivier Jakob, oil analyst at Petromatrix. "Already at $80, we are seeing emerging-market local oil prices pretty close to where we peaked a few years ago ... the race to protect consumers from further price rises from here could potentially impact demand growth sooner than would otherwise have been expected".

Crude stockpiles in the USA have risen for four straight weeks, the longest run of gains since early 2017.

On May 8, President Trump pulled the USA out of a 2015 nuclear pact with Iran reached by his predecessor Barack Obama and other world powers, the U.K., France, China, Russia and Germany, and ordered tough US sanctions on Tehran.

On its part, India, the world's third-biggest oil importer, is facing record high retail prices after global crude price soared and rupee depreciated against the U.S. dollar. Traders were also speculating a likely drop in crude demand due to the ongoing trade disputes between the us and China, and on concerns about the outlook for global economic growth. At the same time, according to the EIA, the U.S. consumes more than 20 million barrels every day.

The U.S. administration has been pushing its allies to cut Iranian oil imports and encouraging Saudi Arabia, other OPEC states and Russian Federation to pump more oil to meet any shortfall.

And then there's Saudi Arabia, the world's largest oil exporter.

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