Brent oil yesterday dropped below $30 a barrel for the first time since April 2004 on speculation Iranian shipments will soon climb.
Crude fell as much as 2.9 per cent in London on signs that a nuclear deal between Iran and world powers may be implemented by the time markets open on Monday, triggering sanctions relief for Iran that paves the way for a surge in oil exports.
It will add 500,000 barrels a day of exports within a week of the removal of sanctions and 1 million within six months, Roknoddin Javadi, head of National Iranian Oil Company said last month, according to the Shana news agency.
Iranian barrels
“The spread between Brent and WTI [West Texas Intermediate] is coming in because Iranian sanctions could be lifted as early as Monday,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. “Additional Iranian barrels will have a much bigger impact on seaborne Brent than on WTI.”
Brent oil slipped 63 cents, or 2 per cent, to $30.23 a barrel on the London-based ICE Futures Europe exchange. The contract touched $29.96, the lowest since April 2004.
WTI crude for February delivery rose 4 cents to settle at $30.48 a barrel on the New York Mercantile Exchange. The US benchmark crude was at a 25 cent premium to Brent, up from 42 cent discount at Tuesday’s close.
Oil had earlier fallen after a US government report showed that US crude and fuel stockpiles climbed.
“Picking a bottom right now is a lot like catching a falling knife,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at John Hancock in Boston.
“We need to see big draws in both inventories and production turnover before there is a sustained rebound.”
The data showed US petrol stockpiles climbed 8.4 million barrels to 240 million barrels, the highest since February. – (Bloomberg)
