Brent crude oil futures LCOc1 were down 34 cents at $77.28 a barrel at 1005 GMT, while U.S. crude futures CLc1 fell by 30 cents to $67.29.
Crude Oil prices Slip on Monday, as concern over the global economy put crude on track for its biggest monthly fall since mid-2016.
Even with U.S. sanctions on Iranian exports due to come into force in under a week, oil has lost nearly 7 percent in value this month, the largest percentage decline since July 2016.
Industrial commodities such as crude and copper have been rattled by hefty losses in global equities due to concern over corporate earnings, fears over economic growth amid escalating trade tensions, and a stronger dollar.
“It is often said that when stock markets sneeze, commodities catch a cold. This adage was on full display last week as a global rout on equity gauges dragged the energy complex lower,” PVM Oil Associates strategist Stephen Brennock said.
“Adding a further tailwind to the prevailing selling pressures are mounting concerns of a budding oversupply. Saudi Arabia and Russia are leading efforts to keep oil markets well supplied at the same time as the demand outlook darkens … The Iranian factor has been put on the back burner and bullish blood will continue to be spilled in the oil market.”
Fund managers have cut their bullish positions in crude futures and options for four weeks in a row to their lowest since July 2017, as the demand outlook grows more uncertain.
Data from the InterContinental Exchange and the U.S. Commodity Futures Trading Commission shows combined bullish holdings of Brent and U.S. crude futures and options have fallen by a third in four weeks, to around 572 million barrels.
This position was equivalent to nearly 1.2 billion barrels in January.
“The market is likely to focus its attention more on fundamental data again, especially with respect to possible supply bottlenecks in the coming months given that strict U.S. sanctions on Iranian oil exports will come back into force from next week,” Commerzbank analysts wrote.
On the supply side, Iran has started selling crude to private companies via a domestic exchange for the first time, the Oil Ministry’s news website reported.
With just days to go before renewed sanctions take effect, three of Iran’s top five customers – India, China and Turkey – are resisting Washington’s call to end purchases outright, arguing there are not sufficient supplies worldwide to replace them, sources familiar with the matter said.
Crude Oil Trades Below $68 as Investors Assess Mixed Supply Outlook
Crude Oil traded below $68 a barrel as traders assessed mixed supply signals from producers. Futures in New York dropped as much as 0.5 percent after falling 2.2 percent last week. Russia suggested on Saturday the country may keep its output at the current level above the Soviet-era record or raise production further, and warned of a potential supply shortage. That’s just days after the Organization of Petroleum Exporting Countries and its allies signaled they could cut output in 2019.
Oil has slumped about 12 percent from a four-year high earlier this month as a rout in global equity markets raised concerns about economic growth and energy demand at a time of growing U.S. crude inventories. With renewed American sanctions on Iran going into full effect in just a week, traders are looking for signs whether OPEC and its partners are able — and willing — to increase production to fill any potential supply gap.
“I expect investors will take a wait-and-see stance this week before the return of sanctions on Iran and U.S. midterm elections,” Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone from Tokyo. Despite a potential decline in Iranian exports, “if both Saudi Arabia and Russia boost output and U.S. production continues to rise, we could have a supply glut.”
West Texas Intermediate for December delivery declined as much as 32 cents to $67.27 a barrel on the New York Mercantile Exchange and traded at $67.36 a barrel at 3:38 p.m. in Tokyo. The contract rose 26 cents to $67.59 on Friday. Total volume traded was about 14 percent below the 100-day average.
Brent for December settlement fell 29 cents to $77.33 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 73 cents to $77.62 on Friday. The global benchmark crude traded at a $9.99 premium to WTI.
Russian Energy Minister Alexander Novak told reporters in Istanbul he sees no grounds for reducing output and that there are risks of a deficit in oil markets. The nation’s oil production in September rose by almost 150,000 barrels a day to 11.356 million, a post-Soviet high, from a month earlier. The country suggested its output rose further in October.
Similarly, Saudi Arabia said last week the kingdom can further increase its production to ease supply shortfalls even as it has already boosted output to 10.7 million barrels a day, near an all-time high. Energy Minister Khalid Al-Falih said OPEC and its allies are in “produce as much as you can mode” to meet demand and replace any shortages.
In contrast, a committee of oil producers including Russia and Saudi Arabia highlighted on Thursday the need to prepare “options” for how much crude they should pump next year to prevent the market slipping back into imbalance. The group said the rise in stockpiles, coupled with fears about an economic slowdown “may require changing course” after they have agreed in June to boost production.
