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Crude Oil Prices - Weekly Outlook: September 17 - 21

CommoditiesSep 16, 2018 05:41AM ET
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© Reuters. Concerns tied to U.S. sanctions on Iran set to dominate sentiment - Oil traders are likely to stay focused on potential disruptions to global crude supplies in the upcoming week, as looming U.S. sanctions on Iran are widely expected to lead to a tighter market.

The sanctions, which from November will include Tehran's oil exports, are being reinstated after U.S. President Donald Trump pulled out of the Iran nuclear deal earlier this year.

Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC), supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to around 2.5% of global consumption.

Crude exports from the Islamic republic are down by almost a third since April, sliding below 2 million bpd in August, and continuing to deteriorate in the first half of September.

Washington wants to cut Iran's oil exports to zero, and is encouraging producers such as Saudi Arabia, other OPEC members and Russia to pump more to meet the shortfall.

Under pressure from Trump to lower oil prices, OPEC and allies agreed in June to boost production, having participated in a supply-cutting deal in place since 2017.

While OPEC production has increased since then, Saudi Arabia has added less crude than it initially indicated.

Meanwhile, fresh weekly data on U.S. commercial crude inventories will also capture the market's attention.

U.S. oil inventories have shown signs of tightening in recent weeks, hitting their lowest level in three-and-a-half years.

Market players will also focus on weekly rig count data for further signals on U.S. output levels.

Data released Friday showed that the U.S. rig count, an early indicator of future output, rose by 7 to 867 last week, according to oilfield services firm Baker Hughes.

Elsewhere, markets will also stay attuned to the next potential steps in the tit-for-tat trade dispute between the U.S. and China following a report that the Trump administration was prepared to impose tariffs on an additional $200 billion of Chinese goods as soon as this week.

Economists are worried that rising trade barriers between the world's major economies will drag on global growth and, by extension, erode energy demand.

Oil settled mixed on Friday. Prices, however, posted gains for the week.

West Texas Intermediate crude for October delivery ticked up 40 cents, or around 0.6%, to settle at $68.99 a barrel on the New York Mercantile Exchange.

Despite Friday's losses, the U.S. benchmark ended the week 1.8% higher.

Brent, the global benchmark, declined 9 cents, or roughly 0.1%, to $78.09 a barrel on the ICE Futures exchange.

The contract hit $80.13 on Wednesday, the highest point since May, and saw a weekly rise of about 1.6%.

Ahead of the coming week, has compiled a list of the main events likely to affect the oil market.

Tuesday, September 18

The American Petroleum Institute is to publish its weekly update on U.S. oil supplies.

Wednesday, September 19

The U.S. Energy Information Administration will release its weekly report on oil stockpiles.

Friday, September 21

Baker Hughes will release weekly data on the U.S. oil rig count.

Crude Oil Prices - Weekly Outlook: September 17 - 21

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