Oil steady on lower Iran exports, rising US supply

A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018. (Reuters)
Updated 29 August 2018
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Oil steady on lower Iran exports, rising US supply

  • Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017
  • Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran

LONDON: Oil prices steadied on Wednesday, supported by news of a fall in Iranian crude supplies as US sanctions deter buyers, but held back by evidence of a rise in US inventories.
Benchmark Brent crude oil was unchanged at $75.95 a barrel by 0905 GMT. US light crude was 5 cents higher at $68.58 a barrel.
Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017, well ahead of the Nov. 4 start date for a second round of US economic sanctions, preliminary trade flows data on Thomson Reuters Eikon show.
Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran, OPEC’s third-biggest producer.
Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million bpd, versus a peak of 3.09 million bpd in April.
“US sanctions toward Iran are now increasingly kicking in which will help to dry up the physical crude oil market,” said SEB Markets commodities analyst Bjarne Schieldrop.
US crude inventories rose by 38,000 barrels to 405.7 million barrels in the week to Aug. 24, the American Petroleum Institute said on Tuesday.
Official US fuel inventory and crude production data will be published later on Wednesday by the Energy Information Administration (EIA).
Traders said reports of potential investment in Venezuela’s struggling oil production also affected markets. Venezuelan crude exports have halved since 2016 to below 1 million barrels per day (bpd).
To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oilfields, although some analysts doubted whether this investment would go through given the instability in the country.
Despite the risk of disruption, especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb toward the end of the year.
“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the US bank said. “Non-OPEC supply outages are at a 15-month high of 730,000 bpd. However, nearly half of these volumes are in the process of being restored.”
Adding to that will be new production in Canada, Brazil and the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second half of the year “taming upside pressures on Brent crude oil prices.”


Egypt stock market plunges as retail investors take flight

Updated 19 September 2018
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Egypt stock market plunges as retail investors take flight

  • Biggest index drop in Egypt since mid-2016
  • Saudi Arabia outperforms in Gulf

LONDON: Egyptian stocks tumbled to their lowest level this year on Wednesday as retail investors took flight.
A sharp rise in Suez Canal revenues, a major foreign exchange earner for the country, was not enough to quell investors concerns about the strength of the currency.
The main Egyptian stock index lost 3.8 percent which some fund managers blamed on generally negative sentiment toward emerging markets worldwide as well as more local speculation about possible currency devaluation.
“Our channel checks suggest the sell-off in the Egyptian market is local retail and institutions driven, on currency fears and speculation over a further round of devaluation,” said Vrajesh Bhandari, portfolio manager at Al Mal in Dubai, Reuters reported.
“Selling is further intensified as margin calls are triggered and technical support levels break down. The country canceled three consecutive Treasury auctions, citing investors’ unrealistic yield demands.”
Egypt’s Suez Canal revenues rose to $502.2 million in August up 6.7 percent from a year earlier according to official data released on Wednesday.
Elsewhere regional stock markets closed mostly lower with the exceptions of Abu Dhabi which edged 0.2 percent higher and Saudi Arabia, the best regional performer, which rose by 1.1 percent.
Saudi stocks are benefiting from the strong oil price which eased slightly yesterday but still hovered just under $79.
OPEC and some other oil producers including Russia will meet in Algeria on Sept. 23 to discuss how to allocate supply increases within their quota framework to offset the loss of oil exports from Iran following the introduction of sanctions by the US.
Those measures will come into force on Nov. 4 and data suggests that buyers are already retreating from Iranian crude purchases.
A key question for the oil price as well as regional stock markets in the weeks ahead will be the extent to which other Gulf oil exporters can compenaste for the loss of Iranian supplies by pumping more.