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Crude Oil Mixed In Asia With Iran Economic Sanctions Waivers In Focus

CommoditiesJan 10, 2018 08:34PM ET
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Investing.com - Crude oil prices were mixed in early Asia on Thursday with investors braced for a decision expected on Friday on whether the Trump administration will continue with economic sanctions waivers on Iran.

On the New York Mercantile Exchange crude futures for January delivery fell 0.08% to $63.52 a barrel, while on London's Intercontinental Exchange, Brent edged up 0.04% at $69.12 a barrel.

Citigroup (NYSE:C) said $80 is a possibility. In a note Tuesday, the bank said the right combination of geopolitical crises could tip crude prices into the $70 to $80 range. With supplies already so tight, any unexpected disruption could cause prices to surge. "After hitting a 5-year low in September 2017, global oil supply disruptions could materially increase in 2018" and and in particular from OPEC countries, the Citi analysts said.

Advisers want Trump to extend Iran deal economic sanction waivers with a decision expected on Friday. But Trump, who has previously vowed to scrap the nuclear pact, is privately expressing reluctance to continue with the waivers - which would imperil a a multi-national deal that includes Russia and European allies.

Overnight, crude oil prices settled higher on Wednesday as traders cheered an unexpected drop in US production while data showing crude stockpiles fell for the eighth-straight week lifted sentiment.

Crude oil prices continued their bullish start to the week as traders cheered signs of ongoing tightening in domestic crude oil supplies which offset a larger-than-expected build in both gasoline and distillate stockpiles.

Inventories of U.S. crude fell by roughly 4.95 million barrels for the week ended Jan. 5, beating expectations for of a draw of 3.44 million barrels.

Gasoline inventories – one of the products that crude is refined into – rose by 4.14 million barrels, well above expectations for a rise of 2.62 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – rose by 4.3 million barrels, confounding expectations for a rise of just 1.46 million barrels.

For tax purposes refiners tend to ramp up activity at the end of the year burning through crude supplies but this activity traditionally slows down in January, supporting a build in product inventories.

Investor fears of rising US production capped upside momentum, however, despite data showing U.S. output fell by nearly 300,000 barrels a day to 9.49 million barrels a day (bpd). Production is expected to hit 10 million bpd next month as rising oil prices attract US shale producers to ramp up output.

Goldman Sachs (NYSE:GS) said it expects the rally in oil prices to meet a ceiling around $70 per barrel as the “new oil order” of shale producers is well underway. Shale producers’ are enjoying significant gains as costs average about $50 to $55 per barrel, the bank added.

Crude Oil Mixed In Asia With Iran Economic Sanctions Waivers In Focus

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