Oil slips as Saudi, Russia quietly agree output rise, US stocks swell

SINGAPORE: Oil prices on Thursday slipped from four-year highs reached the previous session, pressured by rising US inventories and after sources said Russia and Saudi Arabia struck a private deal in September to raise crude output.
Brent crude oil futures LCOc1 were trading at $86.14 per barrel at 06:51 GMT, down 15 cents, or 0.2 per cent, from their last close.
Brent on Wednesday hit a four-year high of $86.74 a barrel, lifted by expectations of a tightening market ahead of US sanctions that will target Iran’s oil exports from next month. US West Texas Intermediate (WTI) crude futures CLc1 were down 18 cents, or 0.2 per cent, at $76.23 a barrel.
“Data for last week showed a much more significant than expected … build in US commercial crude (inventories), which generally suggests that oil prices should tumble,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
US crude oil stocks C-STK-T-EIA rose by nearly 8 million barrels last week to about 404 million barrels, the biggest increase since March 2017, Energy Information Administration data showed on Wednesday.
US weekly Midwest refinery utilisation rates dropped to 78.9 per cent, their lowest since October 2015, according to the data.
Meanwhile, US crude oil production C-OUT-T-EIA remained at a record-high of 11.1 million barrels per day (bpd).
“This on top of the other big news of the day from Riyadh that … Saudi Arabia and Russia will boost output,” Innes said.
Russia and Saudi Arabia struck a private deal in September to raise oil output to cool rising prices, Reuters reported on Wednesday, before consulting with other producers, including the rest of the Organization of the Petroleum Exporting Countries (OPEC).
Russia’s and Saudi Arabia’s actions come as markets have heated up ahead of US sanctions against Iran’s oil sector, which are set to kick in from November 4, and which many analysts expect to knock around 1.5 million bpd of supply out of markets. — Reuters