Investing.com - Speculation that the U.S. may not go full throttle with sanctions on Iran forced the rally in oil to pause again Monday, bringing greater scrutiny on forecasts for $100 Brent.
As trading for oil began a new week, there were concerns the road to triple digits in oil may get a lot of bumpier, with the Trump Administration’s apparent will to let Tehran sell some oil after all come Nov. 4 – vs. its original zero-exports target – if that will keep gas prices in the U.S. from ramping above $3 and help some “friendly” nations like India balance their energy needs.
London-traded Brent was down 0.5% by 2:00 PM ET (18:00 GMT). U.S. West Texas Intermediate WTI crude fell 0.2%, exhibiting the weaker sentiment in place since the outsize build of 8 million barrels in U.S. crude stockpiles during the week ended Sept. 28, a number that was four times more than expected.
Just before the slowdown, Brent’s peak was an October 2014 high of $86.74, while WTI’s high was $75.20.
The Trump administration is considering waivers on sanctions, a U.S. government official said on Friday. Right after that, India’s Oil Minister Dharmendra Pradhan reportedly said that the country would continue to purchase Iranian crude in November and that two firms have ordered barrels from Tehran, though there was no word yet if they would receive waivers.
“The reports were a negative for crude because we had heard earlier that India was going to try to reduce their Iranian imports to zero,” Phil Flynn, a Price Futures Group analyst in Chicago, who’s typically bullish on oil, said in a commentary.
Dominick Chirichella of the Energy Management Institute in New York was more blunt, saying the oil market is “ahead of itself, in the overbought area and susceptible to a round of profit-taking selling at any time … although still in an uptrend.”
While a larger compromise on Tehran wasn’t on the cards yet, “the main downside exposure to the complex is a resolution between the U.S. and Iran to tweak the nuclear pact”, Chirichella said.
Wall Street’s focus on Treasury yields is also turning the attention of macro traders towards bonds amid the headwinds for crude and equities, where the Dow had consistently hit new highs. U.S. bond markets were closed on Monday for the Columbus Day holiday. In Friday’s trading, the benchmark 10-yearTreasury yield hit 3.428%, its highest level since April 2011, before retreating.