Oil Prices Heading for Weekly Drop Amidst Rise in U.S. Crude Stock

Investing.com – Oil prices edged up on Friday morning in Asia but were expected to head for a second weekly drop due to a rise in U.S. crude stocks.

for November delivery rose 0.15% to $68.75 per barrel at 11:37PM ET (03:37 GMT) on the New York Mercantile Exchange, while for December delivery also inched up 0.14% to $79.4 a barrel on London’s Intercontinental Exchange.

U.S. crude stocks surged by 6.5 million barrels last week, almost three times more than analysts’ forecast, according to the U.S. Energy Information Administration (EIA).

“(The) EIA Weekly Petroleum Status Report was a complete shocker sending oil markets spiraling lower amidst some concerning development for oil bulls,” Stephen Innes, head of trading for Asia Pacific at Oanda, told Reuters.

Still, the potential political fallout after the disappearance of Saudi Arabian journalist Jamal Khashoggi and upcoming sanctions against Iran continued to loom over oil markets.

U.S. President Donald Trump vowed on Thursday to find out exactly what happened to Khashoggi, whom he said might be deceased. He warned of a “very severe” response to Saudi Arabia, which is under political pressure for its role in the disappearance. Both business and political leaders have been distancing themselves from the Kingdom.

Khashoggi disappeared after he entered the Saudi consulate on Oct. 2 to obtain marriage documents, sparking speculations over the kingdom’s involvement. Turkish media leaked an audio file that showed the journalist was tortured and murdered in the consulate.

U.S. sanctions on Iran, which will take effect on Nov. 4, have also been cause for concern. Analysts are also worried about whether Saudi Arabia and Russia will be able to compensate for the expected fall of Iranian exports of about 1 million bpd.

“When those sanctions kick in in early November, that’s really when we’ll see those exports really dropping off. So that’s really going to kick in, and that’s why we got ahead of ourselves really in terms of pricing in that fear,” Matt Smith, director of commodity research at tanker-tracking firm ClipperData, told CNBC.

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