Markets

Iran's Crude Oil Prices Ease

Iran's Crude Oil Prices Ease

Crude oil prices remained supported on Friday, climbing to two-week highs following news of a third weekly decline in stockpiles, strong import data from China and recent signals the market is tightening.

The organisation's latest monthly report was published amid optimistic forecasts from the major oil producer group OPEC, with the cartel arguing there was evidence of the global oil market rebalancing following several years of low prices.

Brent crude oil was down 60 cents at $56.34 a barrel by 10.55 GMT.

Liu expects imports through the fourth quarter to average about 8.6 million bpd, with import growth to ease due to a domestic surplus of refined fuel.

In its report Thursday, the IEA said global stock builds, rising non-OPEC production and static oil demand could weigh on the oil price.

The key catalyst for the oil market next year would be Saudi Aramco's planned IPO-the biggest initial public offering ever-Watling agreed, and added "Well, I think they need to get it away quick before oil goes to $10".

Crude inventories fell by 2.7 million barrels in the week to October 6, compared with analysts' expectations for a decrease of 2 million barrels.

But traders said there were ample supplies despite these cuts, thanks to surging U.S. production.

The price of OPEC basket of 14 crudes stood at $54.44 a barrel on Thursday, compared with $54.54 the previous day, according to the latest OPEC Secretariat calculations.

Refinery crude runs rose by 229,000 barrels per day as utilization rates rose by 1.1 percentage points to 89.2 percent of total capacity, the EIA data showed.

"With the USA already out of the summer driving season, there will be less demand for gasoline over the coming weeks - this could result in weeks of crude builds as oil production in the US remains high", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

Of course, there are other views among experts and analysts, with Citi, for example, expecting tighter supply next year, regardless of what OPEC does. I'm not confident prices will breakout to the upside until OPEC and non-OPEC producers decide to extend and deepen the current production cuts.

Not only is the IEA saying demand is expected to remain low, but the EIA also expects US production to rise to 9.2 million barrels per day (bpd) in 2017 and a record 9.9 million bpd in 2018 from 8.9 million bpd in 2016.

The unrest in Iraq could support prices and we may even see a spike to the upside if the situation escalates into military action, but gains may be limited by fear of increased production and low demand.