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Crude oil continues lower

Ole Hansen

Head of Commodity Strategy

Crude oil continues to trade lower despite the improved sentiment seen across other markets where stocks have recovered and the dollar has weakened. The greenback's decline was sparked by renewed Brexit hopes which lifted sterling, while the CNY has retraced from the important 7-per- dollar level after China’s leadership signalled the roll-out of further stimulus measures as economic data continues to disappoint.

Oil, nevertheless, trades lower with WTI testing $65/barrel while Brent has broken below the important $75/b level to challenge its 200-day moving average at $74/b. The market has reacted negatively to yesterday's news from the EIA that US production in August jumped by 3.8% to reach a fresh record of 11.346 million barrels/day. US oil production has now risen an incredible 2.1 million barrels/day year-on-year, in the process surpassing Russia which produced a post-Soviet high of 11.2 million barrels/day in August.  

If that was not enough, Reuters released its monthly Opec production survey which showed the bloc's output rising to its highest since 2016 despite Iran sanctions. Staying with Iran, reports speak of US waivers potentially being granted to India and South Korea, a move that would reduce the impact of the US sanctions on Iran's ability to produce and export crude oil.
Source: Saxo Bank

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