Shares in China, the world’s No 2 oil consumer, tumbled on Friday, with the Shanghai index ending down 3.5 per cent to its lowest close since December 2014 and the yuan weakening sharply offshore. That marked its first move below $30 a barrel since April 2004.
Advertisement
In Friday trading, NY prices hit $29.28 a barrel, a level last seen in November 2003, and following a series of new 12-year lows hit throughout the week.
Oil prices eased in Asia Friday, with the under-pressure commodity sitting around 12-year lows as dealers prepare for the return of Iranian exports on to the market while USA stockpiles increase.
The Global benchmark Brent crude sank as low as US$29.96, before settling at US$30.31 on ICE Futures Europe.
The United Nations’ nuclear watchdog is likely to confirm on Friday that Iran has curtailed its nuclear program as agreed with world powers, paving the way for sanctions to be lifted.
That would pave the way for an increase of Iranian oil exports, which would add to the persistent oversupply of crude around the globe. “The supply and demand landscape for oil continues being bearish as prices continue to take discounts”, Daniel Ang, an analyst with Phillip Futures in Singapore said in a market commentary. As a part of the nuclear accord made earlier in 2015, trade sanctions on Iran will be lifted soon.
For the past 18 months, oversupply has been the main factor responsible for dragging down prices by two-thirds, after Saudi Arabia led Opec in a shift of its policy by deciding against cutting production to support prices. The country has repeatedly said it would ramp up crude oil production by 500,000 bpd as soon as sanctions are lifted. The price decline is affecting producers with BHP Billiton Ltd. expecting to book a $4.9 billion writedown on its USA shale assets, BP Plc planning to cut 4,000 jobs and Petroleo Brasileiro SA slashing its spending plan.
Goldman Sachs said Monday it is sticking to its call that oil prices could fall to $US20 a barrel but added that it is still not the bank’s base-case forecast. The latest weekly report from the EIA states that inventory levels at the end of last week, stood at 482.56 million barrels, compared to 387.8 million barrels in inventory during the same period, last year.
Advertisement
An industry source with knowledge of Iran’s tanker loading schedule told Reuters that Iran’s crude oil exports are set to hit a nine-month high in January with the country being on track to ship 1.10 million barrels a day of crude oil excluding condensate this month.
