Oil prices drop as supply declines

Oil price falls to $75 from high of $86

Oil prices fall on signs of rising supply, economy worries

In that year it pumped 70 percent of the amount produced by OPEC's biggest producer, its regional political rival Saudi Arabia, and more than three times as much as its neighbour Iraq.

After hitting a multiyear high just one month ago, US light crude has lost almost 20 percent and has shown a pattern that hasn't been seen in some time, according to energy expert John Kilduff. Thanks largely to US shale, the fast-growing production from the USA has moved the United States ahead of both Russian Federation and Saudi Arabia.

US crude oil production has increased significantly during the past ten years, driven mainly by production from tight oil formations using horizontal drilling and hydraulic fracturing.

The WTI is likely to stay bearish below $67.25 to target $66.

A report released by the American Petroleum Institute on Tuesday showed USA crude supplies rose by 5.7 million barrels last week, more than analyst forecasts for a 4.1 million-barrel build.

Meanwhile, gasoline and distillate fuel inventories fell 4.8 million barrels and 2.3 million barrels, respectively, which bolstered oil prices.

"Year-on-year growth in United States crude oil production has averaged nearly 1.5 million barrels per day in the first eight months of the year. with output from many key producing regions reaching new all-time highs", said Barclays bank. But the spread would narrow to 4 dollars per barrel by December 2019.

Oil prices were down in afternoon trading prior to the release of the API data on inventories as traders feared additional inventory increases.

Benchmark Brent crude oil LCOc1 fell $1.05 a barrel to a low of $76.29 before recovering slightly to around $76.44, down 90 cents, by 1205 GMT. In 2017, the country consumed more than 19 million barrels of crude oil every day.

India may also route rupee payments through UCO Bank as it did in 2012 when Iran faced similar sanctions from the USA and European nations.

President Donald Trump has discussed global crude oil prices with Saudi King Salman in a telephone call amid the American leader's call for OPEC to bring down energy prices.

Growing concerns over the prospect of a global slowdown amid the ongoing U.S-China trade war were also weighing on prices, said Bruce Xue, an analyst with Huatai Great Wall Capital Management.

China's imports of Iranian crude tumbled 41.6 percent in September from a year earlier to 458,000 bpd, according to oil flow data on Refinitiv Eikon.

Analysts said oil prices were also supported by the upcoming USA sanctions against Iran's crude exports that will start on November 4.

Russia's output in the biggest in 30 years. While there are concerns that global demand could falter amid downbeat forecasts for economic growth, other factors are at play too.

In the coming weeks, traders keep a close eye on US sanctions on Iranian crude exports.

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