Crude oil futures slightly lower Friday, awaiting direction after Thursday sell-off

Nov. 2 (UPI) — Crude oil future prices were slightly lower Friday as they awaited direction following a sell-off in the previous session, continuing volatility that provides opportunities for speculators.

As of 9.30 a.m. EST, front-month WTI futures were $63.26 per barrel, or 0.6 percent lower. Front-month Brent crude futures were $72.60 per barrel, or 0.4 percent lower.

The open “saw liquidation with prices touching $62.99 per barrel before buyers came in. Price action is choppy, with low volume. Market participants are indecisive as they seek direction,” Amir Hekmati, oil futures spec trader at Lucid Energy, told UPI early Friday.

WTI prices fell sharply Thursday with early levels near $65 per barrel declining to about $63.31 per barrel at one point later in the day.

“Market participants will continue to watch the impact of Iran sanctions, Saudi output numbers, and Venezuela production for signs of supply shock risks. Overall, this volatility presents opportunities for speculative traders,” Hekmati added.

U.S.-nuclear related sanctions will go into effect by Monday and it is uncertain how much of the Iranian production will be lost. Separately, there have been concerns related to an ongoing political and economic crisis in Venezuela that could also lead to supply disruptions.

The sanctions aim at preventing Iran from obtaining revenue from its oil exports. There is uncertainty related to how much output will continue to be produced as some companies in some countries may continue to buy oil in defiance of the sanctions. In addition, there has been speculation that the U.S. may issue waivers.

According to recently published projections by the Energy Information Administration, Iran’s production of 2.8 million barrels as of April could be reduced by about a million barrels, based on what happened in 2012 when similar sanctions went into effect.

However, in the past two weeks concerns about reduced supplies were diminished after Saudi Arabia oil authorities announced they had increased output and that they planned to work with both Opec and non-Opec members to coordinate in early December plans to coordinate to prevent supply disruptions causing price volatility.

“I expect the $60 level and slightly lower to be reached before the Dec 6 OPEC meeting, and continued downside pressure until February of 2019 when I predict the physical market to react and the downward trend reverses,” Hekmati said.

Crude oil production may increase in 2019 led by the U.S., which in August became the world’s biggest producer surpassing Saudi Arabia and Russia.

U.S. production is projected to reach 11.7 million barrels per day next year, due to Permian basin production.

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