Oil prices fell on Friday as the global crude supply increased and investors grew more concerned about slowing fuel demand.  Repsol photo.

Oil prices down about 20 per cent since beginning of October

Oil prices continued their downward slide on Friday on rising global supplies and investors’ concerns that fuel demand could slow.  US crude is on track for its longest stretch of daily declines since 1984.

By 2:33 p.m., EST, benchmark Brent crude dropped 58 cents to $70.07.  Earlier in the session, Brent dropped to $69.92, falling below $70/barrel for the first time since early April.  Brent is down about 20 per cent since the beginning of October when it hit a four-year high.

Brent crude futures fell 38 cents to $70.027/barrel and is down about 3.7 per cent this week and over 15 per cent this quarter.

US West Texas Intermediate crude futures were on track for a tenth straight day of losses, the longest losing streak since July 1984, according to Refinitiv data.  WTI crude futures were down 41 cents to $60.26/barrel, recovering from a session low of $59.26/barrel.

“What a difference a month makes,” Michael Tran, commodity strategist at RBC Capital Markets, told Reuters.

“Market sentiment has shifted from the most bullish tone in years with many calling for $100 only weeks ago, to the weakest investor sentiment since the 2016 price trough.”

As the US – China trade war drags on and darkens the outlook for 2019 economic growth, slowing crude demand concerns grow.  On Friday, Chinese data showed producer inflation down for the fourth straight month in October due to falling domestic demand and manufacturing activity.

This data sent global markets into a tailspin on Friday.

Oil peaked in early October as the market grew more concerned that US sanctions on Iranian crude exports would drain global oil inventories and result in crude shortages.

According to Reuters, a South Korean delegation that includes oil buyers is expected to travel to Iran next week to discuss resuming oil imports.  China National Petroleum Corp says it is still importing oil from Iranian fields which it partly owns.

The Trump administration had hoped to cut Iranian crude exports to zero, however, Bernstein Energy says it expects “Iranian exports will average 1.4 million to 1.5 million b/d” during the period the waivers are valid.  This is about half the volume of Iranian crude exports in mid-2018.

Prices were also pressured by the latest report by EIA, where the group revised its crude oil projection for the 2018 average to 10.9 million b/d and the 2019 average to 12.1 million b/d.

It is now certain that the market has completely shifted sentiment to bearish, Drillinginfo said in its weekly report, as waivers are given to Iran’s largest crude buyers; Saudi Arabia, Russia, and the US have increased production to historical highs; and the global economic and demand growth are still threatened by ongoing trade wars and higher crude prices that prevailed for most of the year.

The US Energy Information Administration reported this week that crude stocks at Cushing, Oklahoma, grew for the seventh straight week.

“As OPEC exports continue to rise, inventories continue to build, which is putting downward pressure on oil prices,” Bernstein said. “A slowdown in the global economy remains the key downside risk to oil.”

Also on Friday, Baker Hughes reported the US oil rig count rose by 12 to 886.

According to Drillinginfo. the Anadarko basin had the largest weekly contribution adding 10 rigs. With this addition, the basin reached levels not seen since April 2015 and after recording a record low of 18 rigs a year later in April 2016.

The following basins also had weekly gains: Permian (+4), Piceance (+3) and Marcellus/Utica (+3).

In Canada, the oil rig count dropped by four to 117.

To counteract the increase in supply, earlier in the week, OPEC and its supply cut allies hinted at possible supply cuts next year.  On Sunday, a ministerial committee of some OPEC members and its allies will meet in Abu Dhabi.