Oil ebbs from multi-year highs on surge in U.S. drilling, Iran sanctions opposition
Singapore. Oil prices on Monday fell away from last week’s multi-year highs as a relentless rise in U.S. drilling activity pointed to increased output, while resistance emerged in Europe and Asia to U.S. sanctions against major crude exporter Iran.
Still, crude prices remained near more than three-year-highs reached last week as markets expect Iran’s oil exports to fall significantly once U.S. sanctions bite later this year, informs Reuters.
Brent crude futures LCOc1 were at $76.79 per barrel at 02.29 GMT, down 33 cents, or 0.4 percent from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $70.51 a barrel, down 19 cents, or 0.3 percent.
“Around a million barrels of oil a day is likely to disappear from global oil markets if the U.S. sanctions on Iran bite,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
The renewed sanctions come amid an already tight oil market due to record Asian demand and voluntary output restraint aimed at propping up oil prices led by the Organization of the Petroleum Exporting Countries (OPEC), as well as a group of non-OPEC producers including Russia.
“The U.S. decision to end all nuclear-related sanctions waivers for Iran will smooth the re-entry of (previously) cut OPEC, non-OPEC barrels to market in 2019 (as) it will allow OPEC and Russia to shift their narratives on production from restraint to growth, without derailing the global recovery in oil prices,” BMI Research said in a note.
Markets were also held in check by a rise in U.S. drilling for new oil production.
Hedge funds and money mangers slashed their bullish wagers on U.S. crude in the latest week to the lowest level in nearly five months, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday, in an indicator that many financial oil traders are doubtful of significant further price rises.