US crude oil dropped in a narrow trade for the fourth straight session on Tuesday, with Brent falling slightly below $100 a barrel for the first time in 16 months amid expectations the OPEC will reduce production to support prices.
The significant decline in prices over the previous two months came as a result of the ample supplies from Iraq and Libya despite lingering geopolitical tensions. The extraction of oil shale from the U.S. this fall helped increase oil supplies in the markets. Saudi Arabia, and other OPEC countries, prefers to see oil at levels of $100 a barrel. Some members believe price drop will end September.
In Iraq, the parliament endorsed a new government headed by Haider al-Abadi last night in serious bid to save the country from a possible catastrophe in the shadow of ISIS violence.
Moving to Europe, The EU decided to put on hold for at least few days the new sanctions against Russia over its involvement in the Ukraine war, assessing whether a ceasefire in Ukraine is holding.
The new sanctions targets the three oil companies—Gazpromneft (MCX:SIBN) the oil-production and refining subsidiary of OAO Gazprom Oao (OTC:OGZPY), oil transportation company Transneft (pref) (MCX:TRNF_p), and state-controlled Rosneft (MCX:ROSN).
Three companies involved in military production—Oboronprom, United Aircraft Corporation OAO (MCX:UNAC), and Uralvagonzavod will be barred from future EU fundraising.
On the economic front, traders will be watching Industrial production, manufacturing and trade data from the UK.
Industrial output likely slowed to 0.2% monthly growth in July from 0.3% in June. Manufacturing production probably expanded by 0.3% over the same period. The deficit on trade in goods may have narrowed to £9.1 billion in July from £9.4 billion in June.
As of 06:45 GMT:
West Texas Intermediate for delivery in October traded around $92.84 a barrel, compared with the opening price at $93.09.
Brent for October delivery also fell slightly around $99.97 a barrel compared with the opening price at $100.20.