Brent Crude, Natural Gas Post Gains | Gulf Coast Oil Rig Equipment & Repair
Crude oil futures posted mixed results Monday.
The December West Texas Intermediate (WTI) crude oil price slipped by four cents Monday to settle at $63.10 a barrel.
The WTI traded from a high of $64.14 down to $62.52. The January Brent, meanwhile, posted a 34-cent increase to settle at $73.17 a barrel.
Monday also marked an occasion that oil traders have anticipated for months: the Trump administration’s re-imposition of economic sanctions on OPEC member Iran to constrain its nuclear program. In a , U.S. Secretary of State Mike Pompeo noted that eight countries – China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey – will be allowed to continue importing Iranian crude on a temporary basis to “ensure a well-supplied oil market.”
Despite the waivers, however, an analyst with Wood Mackenzie pointed out that the downward trend in Iran’s exports of crude oil and condensate should continue.
“Since the U.S. withdrew from the nuclear deal in May 2018, Iranian crude and condensate exports fell to around 1.8 million barrels per day in September on our estimates,” Homayoun Falakshahi, senior research analyst with Wood Mackenzie’s Middle East upstream team, said in a statement emailed to Rigzone. “Beyond November 5, we expect crude exports to fall to 1 million barrels per day, though it could vary month to month; and condensate to 100,000 barrels per day. Crude sales will be concentrated around a core of supportive state buyers, China, India and Turkey.”
In contrast, Iran’s exports peaked at 2.8 million barrels per day in April 2018, noted Falakshahi. He added that Iran faces difficulty maximizing its exports when virtually all trade in crude oil is cleared in U.S. dollars. That puts international oil companies, many national oil companies, traders and banks off limits, he explained.
“Crude exports contribute one-third of government revenues, so there’s a huge incentive for Iran to use every conceivable lever,” stated Falakshahi. “We’ve seen Iranian crudes discounted by US$1 per barrel compared with similar Middle East grades, the biggest for a decade. Iran is hoping the EU’s barter proposal – goods as indirect payment for oil – opens doors, though we doubt any big oil traders will leap at the opportunity.”
Front-month reformulated gasoline (RBOB) settled at $1.69 a gallon, losing two cents for the day. December RBOB peaked at $1.72 and bottomed out at $1.68.
Compared to Friday’s settlement price, December Henry Hub natural gas futures posted an impressive 8.5-percent gain on Monday. The benchmark rose by 28 cents to settle at $3.57.