Oil extended its slide to six-month lows as the US softened its crackdown on Iranian exports and American supplies surged, easing concerns of an impending shortage, according to the Economic Times report on Sunday.
Futures slumped 6.3 percent this week, the biggest drop since early February. The US has agreed to let eight countries -- including Japan, India and South Korea -- keep buying Iranian oil after sanctions kick in this weekend to prevent a spike in prices, a senior administration official said.
"Reduced demand and the idea that we’re going to have ample supply seems to have eaten up a lot of the market’s strength this year," said Gene McGillian, senior analyst and broker at Tradition Energy.
Oil’s surge to a four-year high in early October has unraveled as a rout in global equities stokes concern that fuel demand will suffer. Prices are now approaching a bear market, down almost.
“The market has moved from expectations of massive supply scarcity in the fourth quarter to quite opposite expectations of a looming oversupply,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “The focus has shifted, leading to a sell-off by hedge funds, and that’s causing the slide.”
West Texas Intermediate for December delivery declined 55 cents to settle at $63.14 a barrel on the New York Mercantile Exchange. Total volume traded was 8 percent above the 100-day average.
Brent for January settlement fell 6 cents to close at $72.83 on the London-based ICE Futures Europe exchange. The contract sank 6.2 percent this week, a fourth consecutive week of declines. The global benchmark crude closed at a $9.55 premium to January WTI.
President Trump said talks with China -- the leading importer of Iranian oil --
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 and analysts, and ship-tracking data. Saudi Arabia raised production by 150,000 barrels a day to 10.68 million a day, the highest in Bloomberg data going back to 1962, while Iranian volumes slipped by 10,000 barrels a day to 3.42 million.
Hedge funds reduced bullish combined WTI and Brent bets to the lowest level in 15 months, according to Commodity Futures Trading Commission and ICE data.