Oil Falls Back Below $30 With Brent Discount Biggest Since 2010
Oil fell to a new 12-year low below $30 a barrel in New York, while the discount on global benchmark Brent reached a five-year high as Iran moved closer to restoring exports.
West Texas Intermediate futures dropped as much as 5.8 percent in New York and are down more than 10 percent for the week. The grade had slipped below $30 a barrel on Tuesday for the first time since 2003. International sanctions on Iran may be lifted soon, allowing for a boost in oil shipments from the fifth-biggest member of the Organization of Petroleum Exporting Countries.
Oil & Output Chart
“No lasting price recovery is possible at present,” analysts at Commerzbank AG led by Frankfurt-based Eugen Weinberg said in a report. The “lifting of Iran sanctions should put more pressure on oil prices.”
Crude capped a second annual loss in 2015 as OPEC effectively abandoned output limits amid a global surplus. The price decline is affecting producers with BHP Billiton Ltd. expecting to book a $4.9 billion writedown on its U.S. shale assets, BP Plc announcing a further 4,000 job cuts and Petroleo Brasileiro SA slashing its spending plan.
Iran Exports
WTI for February delivery fell as much as $1.81 to $29.39 a barrel on the New York Mercantile Exchange and was at $29.68 at 12:01 p.m. London time. The contract rose 72 cents to $31.20 on Thursday. Total volume traded was more than double the 100-day average. Prices have lost 20 percent this year.
Brent for March settlement dropped $1.07, or 3.5 percent, to $29.81 a barrel on the London-based ICE Futures Europe exchange. The February contract expired Thursday after gaining 72 cents to $31.03. Prices dropped below $30 Wednesday for the first time since April 2004. The European benchmark discount widened to as much as $1.05 to WTI for March, the biggest intraday gap since 2010.
Iran is trying to regain lost market share and doesn’t intend to pressure prices with an export increase once sanctions are removed, officials from its petroleum ministry and national oil company said this month. The nation’s output will increase by 100,000 barrels a day, or 3.7 percent, a month after sanctions are lifted and by 400,000 in six months, according to the median estimate of 12 analysts and economists surveyed by Bloomberg.
Courtesy of bloomberg.com