Oil prices fell on Monday amid rising supply from OPEC and the United States, outweighing concerns that falling Iranian output will tighten markets once US sanctions bite from November.
International Brent crude oil futures LCOc1 were at $77.43 per barrel at 0222 GMT, down 21 cents, or 0.3 per cent, from their last close.
US West Texas Intermediate (WTI) crude futures CLc1 were at $69.62 per barrel, down 18 cents, or 0.3 per cent, from their last settlement.
Output from the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) rose by 220,000 barrels per day (bpd) between July and August, to a 2018-high of 32.79 million bpd, a Reuters survey found.
Output was boosted by a recovery in Libyan production and as Iraq’s southern exports hit a record.
Meanwhile, US drillers added oil rigs for the first time in three weeks, energy services firm Baker Hughes reported on Friday, increasing the rig count by 2 units to 862.
The high rig count has helped lift US crude oil production C-OUT-T-EIA by more than 30 per cent since mid-2016, to 11 million bpd.
Despite the price dip, Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA said Brent was “supported by the notion that U.S. sanctions on Iranian crude oil exports will eventually lead to constricted markets”, which he said would likely push up prices.
“Iranian production is already showing signs of decline, falling by 150,000 barrels per day (bpd) last month ... (as) importers of Iranian barrels will already be moving away from taking shipments,” said Edward Bell, commodity analyst at Emirates NBD bank in Dubai.
Many analysts have warned that an economic slowdown because of trade disputes between the United States and other major economies including China and the European Union would drag on oil demand.
Amid rising trade tariffs raised by Washington and Beijing, China’s manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff, a private survey showed on Monday.
Despite this, OANDA’s Innes said it was too early to say whether an economic slowdown would put a serious dent on oil prices.
“While the analysts continue fretting that $200 billion in tariffs could drag down oil demand, it isn’t at all clear that such type of economic headwinds will topple oil prices given ... the constant barrage of supply outages,” he said.
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