U.S. West Texas Intermediate crude oil futures posted a volatile two-sided trade this week before turning decisively lower for the week. Volume was light at the start of the week due to a U.S. bank holiday, but that didn’t stop prices from edging lower on Monday.
Rising Supply Worries
The early trade was influenced by concerns over rising supply from OPEC and the United States. However, losses were limited by worries over falling Iranian output as we inched closer to the start of U.S. sanctions in November.
According to a week-end report, output from OPEC rose by 220,000 barrels per day (bpd) between July and August, to a 2018-high of 32.79 million bpd. The rise in output was fueled by a recovery in Libyan production and strong Iraqi exports.
Additionally, traders were saying that rising U.S. production could become an issue after Baker Hughes reported on August 31 that U.S. drillers added oil rigs for the first time in three weeks. The rig count increased by 2 units to 862. Furthermore, in August, the U.S. Energy Information Administration reported that U.S. crude oil production hit a record 11 million bpd.
Hedge Funds Increase Bullish Bets
Other supportive news was government data released on August 31 that said hedge funds are betting that the markets will be supported by the notion that U.S. sanctions on Iranian crude oil exports will eventually lead to constricted markets.
Prices spiked higher on Tuesday…