Oil prices steady as concerns about producer output outweigh U.S. stockpile gain
By Trend
Oil prices were steady on Wednesday as concerns that producers will not be able to respond to a shortfall in supply once U.S. sanctions on Iran are enacted outweighed a gain in stockpiles in the United States, the world’s biggest oil user, Reuters reports.
Brent crude futures LCOc1 were down 9 cents at $78.92 per barrel 0334 GMT, after rising 1.3 percent in the previous session.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 4 cents, or 0.1 percent, at $69.81 a barrel after climbing 1.4 percent in the previous session.
Prices rose on Tuesday amid media reports that Saudi Arabia, the world’s largest oil exporter, was comfortable with prices climbing above $80 a barrel.
Reuters reported on Sept. 5 that Saudi Arabia wants oil to stay between $70 and $80 a barrel to keep a balance between maximizing revenue and keeping a lid on prices until U.S. congressional elections.
The Organization of the Petroleum Exporting Countries (OPEC)and non-OPEC producers, including the world’s biggest producer Russia, are meeting on Sept. 23 in Algiers, Algeria, to discuss how they can allocate supply increases within their quota framework to offset the loss of Iranian oil supply.
U.S. sanctions affecting Iran’s petroleum sector will come into force from Nov. 4 though many buyers have already cut their purchases, raising questions about how the market will make up the lost supply.
Traders took the Saudi comments “as a sign that they (Saudi Arabia) won’t be aggressively responding to the rise in prices with supply increases of its own,” said ANZ bank in a note on Wednesday. “It may also suggest they don’t have the ability to make up for the losses that are already stemming from impending U.S. sanctions on Iran.”
OPEC and non-OPEC producers Russia started withholding oil supplies in 2017 to end a global glut and prop up prices.