Oil prices drop as wave of supply meets global economic gloom

An Iranian warship

Oil price falls to $75 from high of $86

Futures have lost 6 percent in NY this week.

What's more, EIA said the higher crude oil prices at the end of 2018 and in 2019 will likely support increased global crude oil production.

Increases in global supply, as well as trade war tensions between the U.S. and China, sent oil plunging earlier in the week.

The International Energy Agency (IEA) on Tuesday said that high oil prices were hurting consumers and could dent fuel demand at a time of slowing global economic activity. The US has allowed eight countries, including India, South Korea, and Japan, to buy limited volumes of Iranian oil as many countries may not be able to cut their purchases to zero, Bloomberg said in a report. "The focus has shifted, leading to a sell-off by hedge funds, and that's causing the slide". Quotes of WTI oil futures for December fell 2% to $65,7 per barrel. The more-active January contract rose 15 cents to $76.10 a barrel.

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"Upstream underlying production, which excludes Rosneft and is adjusted for portfolio changes and pricing effects, was 6.8 percent higher than a year earlier, driven by ramp-up of new projects". The global benchmark crude traded at $9.41 premium to WTI for the same month.

The United States is set to impose new sanctions on Iranian crude from next week and exports from the Islamic Republic have already begun to fall. The other four that will get waivers weren't identified. Consultant Rystad AS estimates that even at $55 a barrel, the nation's output may reach 16.5 million barrels a day by 2030. Oil production from Russian Federation, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed.

Oil production for Chevron (NYSE:CVX) was also higher and profits were healthy as the company more than doubled its earnings for the quarter from past year. "While it may take longer, substantial Iranian losses appear unavoidable and the outlook for prices remains constructive".

Investors will look to official government data on USA inventories due on Wednesday.

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US crude oil production has increased significantly during the past 10 years, driven mainly by production from tight oil formations using horizontal drilling and hydraulic fracturing.

Thursday's drops came after U.S. Energy Information Administration data showed crude oil inventories climbed for a sixth straight week.

There's little doubt that much of the oil market's problems this month are tied to the broader sell-off in equities, which has seen investors shed risk assets like crude futures.

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