WTI to trade with a nine in front of it by year-end: Ira Epstein
Oil declined after Iran and the European Union agreed to restart negotiations on a revival of the 2015 nuclear accord before the end of next month, signaling a greater prospect of Iranian barrels coming back to the market.
Futures in New York fell 2.4 per cent on Wednesday. A date for the big-power talks will be announced next week, Ali Bagheri Kani said in a tweet after meeting the European Union’s deputy envoy for foreign affairs in Brussels. Meanwhile, a U.S. inventory report showing a larger-than-expected crude supply gain also weighed on prices.
If the negotiations lead to the end of U.S. sanctions and Iran oil exports rise, it could end the “threat of a supply shortage that has been partly the reason behind the big oil rally,” said Fawad Razaqzada, a market analyst with ThinkMarkets.
Crude has rallied in recent months as a gas-centered energy crunch boosts demand for oil products and the Organization of Petroleum Exporting Countries and its allies only modestly restore supplies. Global crude inventories are rapidly shrinking, and in China, crude supplies fell to 59 per cent of capacity, according to data analytics firm Kayrros, the lowest since November 2018.
The Biden administration wants to return to the accord with Iran that the U.S. abandoned in 2018, but has refused to lift any Trump-era sanctions or release any Iranian funds before talks resume. Tehran has significantly expanded its nuclear program in response to Washington’s exit and its tough sanctions regime.
- West Texas Intermediate crude for December delivery fell US$1.99 to settle at US$82.66 a barrel
- Brent for December settlement declined US$1.82 to end the session at US$84.58 a barrel
The Energy Information Administration report showed U.S. crude inventories rose 4.27 million barrels last week, more than the industry-funded American Petroleum Institute’s reported 2.32 million-barrel gain.
Inventories at the nation’s biggest storage hub at Cushing, Oklahoma, fell by the most since January, reducing supplies to about 27.3 million barrels. Cushing stockpiles were one of the most widely-watched parts of the report as supplies approach 20 million barrels. Inventories have been draining as oil prices for immediate delivery are well above those for delivery in the future, making storing oil unprofitable.
- Activist investor Dan Loeb has built a position in Royal Dutch Shell Plc and is pushing for a break-up of the energy giant, marking the most serious challenge yet to its strategy of embracing the energy transition while continuing to pump oil and gas.
- Gasoline exports from the U.S. rose to 813,000 barrels a day last week, the highest since August, the EIA report showed. That could be the result of the pull from Latin American nations as they are ending lockdowns. Traffic is surging in Brazil, the biggest buyer of American gasoline after Mexico.
- Libya national oil firm NOC shut down a main pipeline running to Libya’s Es Sider export terminal due to a massive leak that will require 7-10 days of maintenance, according to a person with knowledge of the situation who asked not to be identified because they aren’t authorized to speak to media.
- Hess Corp. said it has expanded its 2022 hedging in Brent oil as prices rallied this month. The U.S.-based oil and gas producer said since the end of September it doubled its cover in global benchmark Brent for next year to 60,000 barrels a day and enlarged its hedging in West Texas Intermediate for the same period to 90,000 barrels a day from 80,000.