Sub-$75/b Brent nearing key support

Crude oil continues to trade lower despite the improved sentiment seen across other markets where stocks have recovered and the dollar has weakened.The USD softness is due to renewed Brexit hopes lifting sterling while USDCNY has retraced from the important 7.00 level after China’s leadership signaled the roll-out of further stimulus measures as economic data continue to disappoint.

WTI crude is testing $65/barrel while Brent has broken below the important $75/b level to challenge the 200-day moving average at $74/b. The market has reacted negatively to yesterday's news from the Energy Information Administration 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 by 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 b/d in August. 

If that was not enough, Reuters then released its monthly Opec production survey which showed the group's output rising to the highest level seen since 2016 despite Iran sanctions. Also on the Iran front, we now see reports discussing US waivers potentially being granted to India and South Korea, thereby reducing sanctions' impact on Iran's ability to produce and export crude oil.