Oil Stabilizes After Sharp Selloff
November 16 2018 - 4:07PM
Dow Jones News
By Sarah McFarlane and Dan Molinski
-- U.S. oil prices ended flat Friday but sharply lower for the week after an
earlier selling frenzy amid worries of a global surplus of crude oil and
weaker demand.
-- Light, sweet crude for December delivery ended unchanged at $56.46 a
barrel on the New York Mercantile Exchange. For the week, U.S. prices
ended 6.2% lower.
-- Brent crude rose 0.2% to $66.76 a barrel.
HIGHLIGHTS
U.S. oil stocks: Inventories of crude in the U.S. rose by 10.3
million barrels in the week ended Nov. 9, the Energy Information
Administration said on Thursday. The build was offset, however, by
draws to product stocks including gasoline and distillate.
Oil rig-count: A weekly report from Baker Hughes on Friday
showed the number of active, oil-directed drilling rigs in the U.S.
rose by two in the latest week to 888, the highest total since
March 2015. The data reinforce the notion that U.S. drilling and
production are likely to keep growing robustly even with U.S. oil
output already at a record-high 11.7 million barrels a day,
according to weekly EIA data.
INSIGHT
Bear market: Oil prices entered a bear market last week after a
combination of factors -- including some sanctions relief to select
Iranian oil buyers, revisions upward to U.S. output and a weakening
outlook for demand growth -- fueled fears of excess supply. Earlier
this month, the Trump administration announced waivers for eight
countries to temporarily continue importing some volumes of Iranian
oil. "I think both the size and scale of the waivers did take the
market by surprise," said Caroline Bain, an economist at consulting
firm Capital Economics, adding that the announcement was a catalyst
for the latest price slump.
OPEC: Analysts are expecting the Organization of the Petroleum
Exporting Countries will agree to cut output at their meeting in
December to stabilize the market and prevent a supply surplus due
to signs of weakening demand, and the softening of U.S. sanctions
on Iran. "The waivers will effectively prop up a good chunk of
Iran's exports," said Stewart Glickman, head of energy research of
CFRA Research. "We think OPEC and partners such as Russia will feel
compelled to agree on a sizable cut to production levels at OPEC's
next meeting."
AHEAD
-- The American Petroleum Institute, an industry group, releases its weekly
report on U.S. oil inventories next Tuesday, while the EIA releases its
official inventory report on Wednesday.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Dan
Molinski at Dan.Molinski@wsj.com
(END) Dow Jones Newswires
November 16, 2018 15:52 ET (20:52 GMT)
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