Oil Holds Steady After Progress on OPEC+ Deal and Iran Sanctions
Oil held steady after jumping on Tuesday, with OPEC+’s progress on a deal to keep supply shuttered drawing algorithmic traders back to the market.
West Texas Intermediate edged lower to slip beneath $70 a barrel, holding most of Tuesday’s 2.7% gain. Brent traded near $73.
Algorithmic traders have been dumping bearish positions after futures surpassed both the $70-a-barrel psychological level and the 50-day moving average, which have provided resistance for previous rallies, said Dennis Kissler, senior vice president for trading at BOK Financial Securities.
The OPEC+ producer group is edging closer to an agreement to push back a plan to revive output by an additional three months, delegates said. Meanwhile, the US has sanctioned 35 entities and ships that it said play a critical role in the shadow fleet transporting illicit Iranian oil to foreign markets.
The prospect of an OPEC+ output hike delay, alongside “the added sanctions on Iran, is changing the sentiment on crude to more bullish,” Kissler said. “That, along with a move back above the 50-day moving average, has brought the buyers back, at least in the near term.”
In the US, figures from the country’s Energy Information Administration showed crude oil inentories fell by 5.07 million barrels last week. That compared with a forecast from the American Petroleum Institute showing nationwide crude stockpiles rose by 1.2 million barrels last week.
Still, the official EIA data showed a gain for US gasoline inventories.
And meanwhile, data from the Institute for Supply Management showed US services activity expanded in November at the slowest pace in three months, prompting concerns over economic expansion.
Despite a recent rally, crude has been locked in a band of roughly $6 since the middle of October, buffeted by the imminent Donald Trump presidency, geopolitical tensions in the Middle East and Ukraine and a lackluster demand outlook from top importer China. Amid widespread concern the global market faces a glut next year, OPEC+ is due to finalize supply plans at an online meeting on Thursday.
WTI for January delivery fell 0.2% to $69.82 a barrel at 10:37 a.m. in New York. Brent for February settlement slid 0.1% to $73.52 a barrel.
Source : Bloomberg
