Crude oil notched its longest losing streak in four years as expanding US stockpiles overshadowed supply concerns from the Persian Gulf to Latin America.
Brent futures for January settlement slipped 44 cents to $71.63 a barrel on the London-based ICE Futures Europe exchange, while the US benchmark, West Texas Intermediate crude, declined 47 cents to $61.20 a barrel in New York.
The last time crude registered such a downtrend was mid-2014. American oil inventories grew at more than twice the anticipated pace last week, a US government report showed this week.
That supply overhang trumped indications Opec may discuss production cuts as soon as this weekend. Crude has tumbled 20% since touching a four-year high last month as apprehensions over sanctions targeting Iranian oil exports evaporated, in part because of exemptions handed to some of the Islamic Republic’s biggest customers.
US president Donald Trump said the waivers were intended to soften the blow to global crude markets. “Most of this selling pressure is related to the removal of fears concerning tight supplies from the drop in Iranian exports and the granting of those temporary waivers,” said Gene McGillian, a senior analyst and broker at Tradition Energy.
Consultant FGE estimated the waivers granted to China, India, and six other nations will allow Iran to continue shipping 1.2m to 1.7m barrels a day, more than previously expected. “Opec and Russia may use cuts to support prices at $70 a barrel,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“But the US sanctions waivers could prevent prices from breaking above $80,” he said. At a gathering this weekend in Abu Dhabi, Opec and allied producers will discuss scenarios including a second production U-turn that would curb output next year, according to delegates.
Pressure from the US to lower prices probably will decrease now that the nation’s midterm elections are over, Saxo Bank’s Mr Hansen said. Producers including Saudi Arabia and Russia had opened the taps earlier this year following unprecedented political pressure from President Trump. After meeting with Russian Energy Minister Alexander Novak in Moscow, Lukoil first vice president Ravil Maganov said a resumption of cuts couldn’t be ruled out.