Oil Price Drops to $45.87/barrel Over Rising Glut Concerns

Crude oil prices slid 2 percent on Friday, September 16, to multi-week lows as bloating Iranian exports reinforced concerns  of a global supply glut.
U.S. West Texas Intermediate futures settled down 88 cents, or 2 percent, at $43.03 a barrel, after falling to $42.74, the lowest intraday level since Aug. 11. WTI slipped about 6.2 percent this week.
Benchmark Brent crude futures traded down 72 cents, or 1.6 percent, at $45.87 a barrel at 2:37 p.m. ET (1837 GMT). The contract earlier fell as low as $45.48 and is down nearly 5 percent on the week.
Falling U.S. equities and a rising dollar also weighed on crude futures and other industrial commodities denominated in the greenback.

Gasoline surged 3 percent on news of an extended outage on Colonial Pipeline’s main gasoline line and in a key unit of BP’s Whiting, Indiana refinery. The profit for turning crude into gasoline hit three-month highs and pump prices for the fuel rose as well.

“Crude futures are taking on an increasingly bearish appearance,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates. For WTI, “this can potentially expedite our expected trip south to the $39 area,” he said.

Oil slumped after a source familiar with Iran’s tanker loading schedules said the third-biggest OPEC producer raised crude exports to more than 2 million barrels per day (bpd) in August, nearing pre-sanctions levels.

Much of Iran’s fresh output has found a home in Asia and Europe. India’s daily oil imports from Iran rose to the highest in at least 15 years in August, according to trade sources and shipping data. Austria’s OMV said it had taken delivery of an Iranian crude oil spot delivery in Italy, its first cargo from Iran since 2012.

Iran and OPEC kingpin Saudi Arabia have been raising exports despite the approaching Sept 26-28 meeting in Algeria, where the Organization of the Petroleum Exporting Countries and other major producers are to discuss an oil production freeze. Most market participants are skeptical a deal will be reached.
There are also signs of a return of output from Nigeria and Libya, two countries whose crude exports have been hampered by conflict and unrest.

Libya is resuming oil exports from some of its main ports and has lifted related force majeure contractual clauses, the National Oil Corporation (NOC) said. In Nigeria, ExxonMobil was making preparations to load a cargo of Qua Iboe crude at the end of September, trading sources said, its first since it imposed force majeure in July.

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