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Oil drops below $64 as rising OPEC+, Iranian output weighs

CommoditiesApr 05, 2021 09:40AM ET
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© Reuters. A 3D printed oil pump jack is seen in front of displayed stock graph and Opec logo in this illustration picture

By Alex Lawler

LONDON (Reuters) - Oil fell to below $64 a barrel on Monday as rising supply from OPEC+ and higher Iranian output countered signs of a strong economic rebound in the United States and expectations of a wider demand recovery in 2021.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed on Thursday to monthly production hikes from May to July. OPEC member Iran, exempt from making voluntary cuts, is also boosting supply.

Brent crude for June fell $1.44, or 2.2%, to $63.42 a barrel by 1425 GMT. U.S. West Texas Intermediate crude for May dropped $1.60, or 2.6%, to $59.85.

"The OPEC+ decision, perhaps nudged along by increasing Iranian production heading to China, probably means we have seen the best of the oil rally now for the next few months," Jeffrey Halley of brokerage OANDA said.

Oil has recovered from historic lows last year with the support of record OPEC+ cuts, most of which will remain after July, and some oil demand recovery that is expected to gather pace in the second half of the year.

While a slow vaccine rollout and return to lockdown in parts of Europe have weighed on the rebound, figures on Friday showed the U.S. economy created the most jobs in seven months in March, with all industries adding jobs.

"The seemingly invincible accelerating U.S. recovery has offset OPEC+'s announcement on Thursday," Halley said.

In another development that could eventually lead to more supply, investors are focused on indirect talks between Iran and the United States as part of negotiations to revive the 2015 nuclear deal between Tehran and global powers.

Eurasia analyst Henry Rome said he expected U.S. sanctions, including restrictions on Iranian oil sales, to be lifted only after these talks are completed and Iran returns to compliance.

Iran has already boosted exports to China despite the sanctions.

Oil drops below $64 as rising OPEC+, Iranian output weighs
 

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Comments (5)
Md Abu Bokor Himel
Md Abu Bokor Himel Apr 05, 2021 10:39AM ET
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Market will remain like this l. it will gain 2-3% and then slip the same until it breaks the Range and create a specific direction.
Md Abu Bokor Himel
Md Abu Bokor Himel Apr 05, 2021 10:39AM ET
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Market will remain like this l. it will gain 2-3% and then slip the same until it breaks the Range and create a specific direction.
Nirav Pathak
Nirav Pathak Apr 04, 2021 10:07PM ET
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On Friday thru posted oil is up because of bullish Outlook by OPEC as they plan to increase output. I am not even sure why I am reading this...grrr
Jose Maderno
Jose Maderno Apr 04, 2021 9:08PM ET
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Reuters has become a joke.  In the past month their articles have said contango is bearish and backwardation is bearish.  Moves of 16 cents warrant headlines of slippage.  The western press has become a propaganda rag.
Barani Krishnan
Barani Krishnan Apr 04, 2021 9:08PM ET
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Jose Maderno: Contango is bearish and backwardation is "bullish" (that's Reuters' standard language; find their copy that says otherwise. if not, I'm inclined to believe you are misquoting them). And 16 cents drop IS called a "slippage". If they called it a plunge; then it would be an exaggeration. I know you their reporting may not be favorable to your position taking in crude. But if you have to criticize, please criticize objectively. Thank you.
Barani Krishnan
Barani Krishnan Apr 04, 2021 9:08PM ET
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Jose Maderno, actually, I have to ask whether you even read the story. The lead paragraph says: "Oil prices slipped on Monday, paring strong gains made in the previous session after OPEC+ agreed last week to gradually ease some of its production cuts between May and July." THAT IS EXACTLY WHAT HAPPENED, isn't it??? It PARED the strong gains made IN THE PREVIOUS SESSION AFTER Opec agreed last week to gradually ease some of its production cuts. Find me ONE, JUST ONE factual error in that paragraph. If you can't, then you have no business criticizing Reuters' reporting on this.
Steven king
Steven king Apr 04, 2021 8:22PM ET
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What slipped , you people at reuters are doom and gloom ..
Barani Krishnan
Barani Krishnan Apr 04, 2021 8:22PM ET
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Read my above to Jose Maderno, Steven King.
 
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