Oil falls from 4-year highs; Wall Street weighs in

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices fell on Thursday as the prospect of increased crude output from Saudi Arabia and Russia prompted profit-taking a day after futures hit four-year highs on looming sanctions by USA on manufacturer no. 3 of OPEC, Iran. .

Brent crude oil futures were down $1.71, or 1.98 percent, at $84.58 a barrel. Brent hit a late-2014 high of $86.74 on Wednesday.

US West Texas Intermediate (WTI) crude oil futures they fell $2.08 to $74.33 a barrel, a loss of 2.72 percent.

Market participants took profits after Brent climbed to its most technically overbought level on Wednesday since February 2012. WTI was the most overbought since January. The Relative Strength Index (RSI) for both Brent and US crude rose above 70 this week, a level often seen as signaling a market that has gone too high.

On Thursday, the RSI of both contracts retreated below 70.

Weighing on oil prices, US stock indexes were broadly lower, with the benchmark S&P 500 <.SPX> on pace for the biggest one-day decline since late June. Crude oil futures sometimes go with the stock markets.

Also keeping pressure on oil prices, crude stockpiles in the U.S. hub of Cushing, Oklahoma, rose by about 1.7 million barrels from Sept. 28 to Tuesday, traders said, citing a report from market intelligence firm Genscape.

“Today’s pullback appeared heavily influenced by the sharp decline in stocks and appeared to be a well-deserved correction given the magnitude of the recent price acceleration,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Oil prices rose as the market braced for sanctions against Iran, which will come into force on November 4. Saudi Energy Minister Khalid al-Falih said on Thursday that the Organization of the Petroleum Exporting Countries had managed to increase production by 1.3 million barrels per day, but gave no signal that the producer group would do so.

The kingdom plans to invest $20 billion to maintain and possibly expand its reserve oil production capacity, and currently has a maximum sustainable capacity of 12 million bpd.

Reuters reported on Wednesday that Russia and Saudi Arabia struck a private deal in September to increase production.

HIGH PRICES BEGIN TO RISE ON SAVINGS, DEMAND

Rising oil prices and concerns about global trade are putting pressure on emerging economies, International Energy Agency Executive Director Fatih Birol told Reuters.

India is facing an “economic crisis” due to its huge oil imports, two local TV channels said, citing Transport Minister Nitin Gadkari. India was also hit by a slide in the rupee against the dollar.

A strong dollar makes dollar-denominated oil more expensive for buyers using other currencies.

“We recently argued that hitting the $100 mark would be a tall order,” said Tamas Varga, strategist at PVM Oil Associates.

“Around the end of November, we will have a good idea of ​​how many barrels will be lost due to the second round of Iranian sanctions being launched. Until then, all the optimistic news will be in the market”.

(Reporting by Stephanie Kelly in New York and additional reporting by Amanda Cooper in London; Editing by Dale Hudson, David Evans, Alexandra Hudson)