Oil eases as focus shifts from Iran tensions to United States crude build

Andrew Cummings
January 11, 2020

Also an unexpected increase in the crude oil inventories in the USA has resulted in a drop in oil prices.

Iran responded to the USA drone strike on January 8 with a missile attack on Iraqi air bases hosting US forces that left no casualties.

Gold prices were trading marginally lower, tracking bearish trend from overseas, following remarks by the US President Donald Trump offering to embrace peace with the Iranian leadership, in a bid to de-escalate tensions in the Middle East.

Crude oil prices fell further Thursday after sharp losses in the day-earlier session, as the market shifted its focus towards rising USA crude stocks and away from fears of an imminent escalation of conflict between the US and Iran, Kallanish Energy reports.

The U.S. Brent crude futures were dipped by 4.1 percent at 5 cents for $65.40 per barrel early hours on Wednesday while West Texas Intermediate (WTI) futures surged slightly up 1 cent to $59.63 per barrel after falling almost 5 percent previous trading sessions.

During European trading hours Iranian media carried reports of military commanders speaking of further action aimed at expelling USA troops from the region. Brent crude futures moved up and down in early European trading after a 4.1% fall on Wednesday.

The build, reported on Wednesday by the Energy Information Administration, shocked the market after analysts forecast a drop of 3.6 million barrels.

"With the standing down of Iran there was a sense that oil supplies were pretty safe but now with the institution of sanctions and this report that a Russian ship was acting aggressively toward a US ship, it's put a little bit of fear back into the market place", said Phil Flynn, oil analyst at Price Futures Group in Chicago.

Top oil producers led by Saudi Arabia have agreed to reduce output by as much as 2.1 million barrels per day (bpd) during the first quarter of 2020.

Brent futures for March settlement lost 7 cents to $65.30 (€58.84) a barrel on the ICE Futures Europe exchange.

They were down a cent at $65.43 a barrel in later trade while West Texas Intermediate was up two cents at $59.63 after sliding almost 5% the previous day.

On the Multi Commodity Exchange, crude oil delivery for February contracts slipped Rs 37, or 0.87 percent, to Rs 4,206 per barrel with a business turnover of 3,660 lots. Historically, Crude oil prices had reached an all-time high of 147.27 in July 2008.

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