By Tsuyoshi Inajima and Alex Longley

Sep 13, 2019

(Bloomberg) Oil was set for a weekly decline as the International Energy Agency warned of a looming supply glut.Futures erased earlier losses in New York on Friday, but were still down 1.9% for the week. Sentiment has been dominated by the challenge facing the Organization of Petroleum Exporting Countries and its allies in managing the market in 2020 as production surges from their competitors. While OPEC+ didn’t discuss deepening its output curbs in Abu Dhabi on Thursday, it put pressure on members to implement their promised cuts in an effort to avoid a surplus.

WTI is on course for biggest weekly drop in a month

Glut concerns were also fueled this week by speculation that Donald Trump had discussed moderating sanctions on Iran, with RBC Capital Markets estimating such a move could bring back around 700,000 barrels a day. Meanwhile, the U.S. and China showed signs of rapprochement in their trade war and Saudi Arabia’s new energy minister downplayed oil-demand concerns, leaving any talk of deeper output cuts to OPEC’s next ministerial meeting in December.

“An increasingly heavy balance for 2020, along with the risk of possibly more leniency on Iran with sanctions, is weighing on sentiment,” said Warren Patterson, head of commodities strategy at ING Bank NV. “OPEC was never going to announce deeper cuts now; I think that will only happen in December, unless they are forced before then by a selloff.”

West Texas Intermediate crude for October delivery advanced 40 cents to $55.49 a barrel on the New York Mercantile Exchange as of 9:15 a.m. local time.

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Brent for November gained 14 cents to $60.52 a barrel on the ICE Futures Europe Exchange, and traded at a $5.20 premium to WTI for the same month.

OPEC+ faces a “daunting” challenge as output growth in countries from Brazil to Norway means 2020 could see a significant increase in stockpiles and pressure on prices, the IEA said on Thursday. Demand for OPEC’s crude in the first half of next year will be 1.4 million barrels a day below its August production, the agency said.

There were some signs of goodwill ahead of planned trade talks between the U.S. and China. The Asian nation plans to encourage companies to buy American farm products including soybeans and pork, and it will exclude those goods from additional tariffs, the editor-in-chief of a prominent state-run newspaper said.

Other oil-market:
A fire on at a vessel at Equinor ASA’s Sture oil terminal in Norway has been put out, the local fire authority said. Scott Sheffield, one of the earliest executives to recognize the Permian Basin’s potential, is scaling back his expectations for the world’s largest shale field. A tropical storm watch has been set for parts of Florida as a system that followed Dorian into the Bahamas, dumping as much as 6 inches of rain on those hurricane-devastated islands, targets the U.S. East Coast.

Other oil-market:

A fire on at a vessel at Equinor ASA’s Sture oil terminal in Norway has been put out, the local fire authority said.
Scott Sheffield, one of the earliest executives to recognize the Permian Basin’s potential, is scaling back his expectations for the world’s largest shale field.
A tropical storm watch has been set for parts of Florida as a system that followed Dorian into the Bahamas, dumping as much as 6 inches of rain on those hurricane-devastated islands, targets the U.S. East Coast.