Oil Sinks to Six-Month Low as U.S. Supply Surge Eases Iran Fear
(Bloomberg) -- Oil fell to the lowest in more than six months on signs U.S. supply is accelerating and on speculation that American sanctions against Iran won’t succeed in reducing exports to zero.
Futures in New York dropped 2.5 percent, extending its slide to a fourth day. OPEC crude production rose in October to the highest since 2016, while Russia was said to raise output to a post-Soviet record. The U.S. surpassed Russia in August, with the largest year-on-year supply increase in U.S. history. Also, concern over the loss of Iranian exports eased after India and South Korea were said to agree with the U.S. on the outline of waivers.
Oil tumbled 11 percent last month, the most since July 2016, as an equity rout and U.S.-China trade tensions concerns over economic growth. Still, the Organization of Petroleum Exporting Countries and its allies are sending mixed signals on whether they’ll boost output to fill any shortfall from the return of sanctions on Iran set to kick in on Nov. 4.
“Rising oil inventories and growing petro-nations output have calmed the supply fears related to the Iran oil embargo,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich. “While in the near term, prices are at risk from any further supply disruption, oil should trend lower heading into 2019.”
West Texas Intermediate for December delivery fell $1.62 to settle at $63.69 a barrel on the New York Mercantile Exchange, the lowest level since April 9.
Brent for January settlement fell $2.58 to $72.89 on the London-based ICE Futures Europe exchange.
Brent crude dipped below the 200-day moving average for the first time since 2017, seen as a bearish signal and usually an invitation for more selling. WTI dropped below this same technical level in October.
The U.S. signaled Wednesday that some countries may continue importing Iranian crude after sanctions enter into full force on Nov. 5. Several nations “may not be able to go all the way to zero” right away on purchases, said White House National Security Adviser John Bolton. America wants to put maximum pressure on Iran, but doesn’t “want to hurt friends,” he said.
The Energy Information Administration reported Wednesday U.S. crude inventories rose for a sixth week, longest streak of gains since March 2017, adding 3.22 million barrels.
|Other oil-market news|
©2018 Bloomberg L.P.