OIL dips below Brent 84.00 on Saudi supply talk

Oil in London extended losses below $84 a barrel after Saudi Arabia said it can tap its spare production capacity immediately to offset any declines in Iranian crude exports due to American sanctions

Brent fell as much as 1.1 percent, after retreating 2.5 percent in the past two sessions. Saudi Arabia is pumping about 10.7 million barrels a day and can add another 1.3 million, the kingdom’s crown prince said in an interview. Meanwhile, the Trump administration was said to be in talks with countries that want to continue buying Iranian crude after sanctions resume Nov. 4.

Oil has eased after rallying to a four-year high above $86 a barrel in London last week. Still, traders remain concerned the Organization of Petroleum Exporting Countries and its allied producers aren’t raising output quickly enough and that they may not have the capacity to fully cover a decline in exports from the Persian Gulf state.

“OPEC’s spare capacity issue has been the oil markets biggest mystery for some time with most of that debate falling around mega-producer Saudi Arabia,” Stephen Innes, head of Asia Pacific trading at Oanda Corp. said in an emailed note. “The problem is that the capacity is quickly declining due it Asia’s insatiable demand.”

Bloomberg

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes