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Crude retreats from yearly highs, as Iran, Cushing remain in focus

CommoditiesMay 04, 2015 02:53PM ET
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WTI crude fell below $59 a barrel Monday, while brent remained above $66

Investing.com -- Crude futures fell mildly on Monday after approaching near six-month highs, as investors locked into profits from last month's extended rally.

On the New York Mercantile Exchange, WTI crude for June delivery fell 0.25 or 0.42% to 58.90, extending Friday's losses. Earlier in the session, Texas Light Sweet futures rose to $59.75, approaching a key technical level at $60 a barrel. WTI crude futures have not been above $60 since just before Christmas. On the Intercontinental Exchange (ICE), brent crude for June delivery dipped 0.07 or 0.11% to 66.39, after reaching $67.08 earlier in the session – its highest level since Dec. 9. The spread between the U.S. domestic and international benchmarks of crude stood at $7.49, slightly below Friday's level of $7.63 at the close of trading.

Last month, crude futures spiked by more than 18% as declining production eased fears of global oversupply. Crude is still down, however, by more than 40% after reaching triple digits last summer.

On Monday, Genscape Inc., a leading global provider of real-time data for commodity and energy markets told clients that crude stockpiles at the Cushing Oil Hub in Oklahoma fell by 100,000 for the week that ended April 31. It came after the Energy Information Administration (EIA) reported that supply levels at Cushing declined by 500,000 last week to 61.7 million barrels, marking its first weekly decline in 2015. Last month, crude inventories at Cushing, the largest storage facility in the U.S., reached record levels amid cascading production at shale fields nationwide.

Since then, shale output has leveled off reducing fears that Cushing could reach full storage capacity by the start of the summer. Speaking at the Sohn Investment Conference in New York, Greenlight Capital CEO David Einhorn railed against fracking stocks, zeroing in on Irving, Texas-based Pioneer Natural Resource Co., an independent oil and gas company.

"We object to oil fracking because the investment can contaminate portfolio returns," Einhorn said. "We think that in the current environment Pioneer has a negative return on capex."

As a result, shares in Pioneer Natural Resources tumbled 3.17 or 1.85% to 168.39, after hitting a session-low of 162.50.

Elsewhere, the U.S. Senate reportedly forged ahead with debate on an Iranian nuclear bill increasing the likelihood that the bill could come up for vote later this week. On Sunday, Politico reported that Republican leaders had moved close to thwarting Sen. Tom Cotton's (R, Arkansas) efforts to upend bipartisan legislation paving the way for passage of the bill. In a bit of surprise, Cotton proposed an amendment last week that would require Iran to disclose its nuclear history and close all of its nuclear facilities as part of the bill.

Last month, Reuters reported that Iran has 30 million barrels of oil stored in offshore tankers ready for export, after the Persian Gulf nation agreed on the framework of a nuclear deal with Western powers. In addition, Facts Global Energy, an energy consulting firm, has forecast that Iranian oil exports could reach a level of 1.7 million barrels per day within 12 months of a final deal up from it current level of a million bpd.

An outflow of Iranian could depress oil prices in a global market already saturated by a glut of supply.

Crude retreats from yearly highs, as Iran, Cushing remain in focus
 

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