Oil prices set for worst week since February as US said to grant waivers
Oil prices are set for the biggest weekly loss since February as fears over a supply disruption eased as the US was said to agree on giving waivers to eight nations to continue importing Iranian crude after it reimposes sanctions
Tokyo: Oil prices are set for the biggest weekly loss since February as fears over a supply disruption eased as the U.S. was said to agree on giving waivers to eight nations to continue importing Iranian crude after it reimposes sanctions on the OPEC producer. Futures in New York are on course for a 6 percent weekly decline. While America’s goal remains to choke off revenue to Iran’s economy, exemptions are being granted to countries including Japan, India and South Korea so as not to drive up oil prices, said a senior administration official. Crude earlier pared a weekly drop on signs of a possible trade agreement between the U.S. and China.
Oil is approaching a bear market with prices falling more than 16 percent from a four-year high in October as a rout in global equity markets and U.S.-China trade tensions stoked concerns over economic growth. Investors are keeping an eye on the level of global supplies as the Organization of Petroleum Exporting Countries have boosted output to the highest level in October to replace potential shortfalls from Iran at a time when U.S. inventories and production are also growing.
“In theory, we could have been in a bullish market because of sanctions against Iran. But rising production from Saudi Arabia and others, coupled with a global equity rout and concerns over economic outlook, is weighing on prices,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. “As South Korea and India reportedly agreed with the U.S. on waivers, the Iran factor is weakening.”
West Texas Intermediate for December delivery lost 25 cents to $63.44 a barrel on the New York Mercantile Exchange at 7:51 a.m. in London. The contract fell $1.62 to $63.69 on Thursday. Total volume traded was 30 percent above the 100-day average.
Brent for January settlement fell 18 cents, or 0.3 percent, to $72.71 a barrel on the London-based ICE Futures Europe exchange. The contract is down 6.4 percent this week for a fourth consecutive week. The global benchmark crude traded at $9.14 premium to WTI for the same month.
China -- the leading importer of Iranian oil -- is still in discussions with the U.S. on terms, but is among the eight, according to two people familiar with the discussions who also asked not to be identified. The other four countries that will get waivers weren’t identified and Secretary of State Michael Pompeo will make an announcement on the number of waivers on Friday.
OPEC increased output by 430,000 barrels to 33.33 million barrels a day in October, the highest since 2016, according to a Bloomberg survey of officials, analysts and ship-tracking data. Saudi Arabia increased output by 150,000 barrels to 10.68 million a day last month, the highest in Bloomberg data going back to 1962, while Iran’s production slipped by 10,000 barrels a day to 3.42 million, the lowest since March 2016.
Meanwhile, crude prices edged higher earlier on Friday after Bloomberg News reported that U.S. President Donald Trump wants to reach an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina later this month and has asked key U.S. officials to begin drafting potential terms.
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