Bulletin
Investor Alert

New York Markets Open in:

×

Futures Movers Archives | Email alerts

July 16, 2019, 3:31 p.m. EDT

U.S. oil at lowest in over a week as Pompeo says Iran is ready to talk

Comments from Pompeo calm oil-flow concerns tied to Iran

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

By Myra P. Saefong and Mark DeCambre, MarketWatch


Reuters
Analysts expect to see a weekly fall in U.S. crude supplies

Oil futures settled sharply lower Tuesday, following reports that U.S. Secretary of State Mike Pompeo said Iran is ready to enter negotiations over its missile program, easing concerns about tensions between Washington and Tehran that had put the flow of oil in the Middle East at risk.

Oil had been moving higher earlier Tuesday, with U.S. prices briefly touching highs above $60 a barrel, on expectations that U.S. government data due Wednesday will show a decline in weekly domestic crude stockpiles on the back of storm-related disruptions to output.

August West Texas Intermediate crude dropped $1.96, or 3.3%, to settle at $57.62 a barrel, for the lowest finish on the New York Mercantile Exchange since July 5. The downturn followed an earlier Tuesday high of $60.06 and a decline of 1.1% on Monday. International benchmark September Brent lost $2.13, or .2%, to end at $64.35 a barrel on ICE Futures Europe.

At a Cabinet meeting at the White House, Pompeo said the Iranians have told the U.S. that they are ready to negotiate on their missile program, according to The Washington Times . The news followed concerns that Iran may have seized a small United Arab Emirates oil tanker traveling through the Strait of Hormuz over the weekend.

Prices had logged losses Monday as production in the Gulf of Mexico began its recovery from what was known as Hurricane Barry over the weekend. On Tuesday, about 58% of gulf oil output remained offline, compared with 69% on Monday.

Crude oil ended higher last week, its third positive weekly close out of the past four weeks, “thanks to ongoing Middle East tensions, falling U.S. crude inventories and storm Barry in the Gulf of Mexico—all raising short-term supply shock risks,” said Fawad Razaqzada, technical analyst at Forex.com, in a note Tuesday.

“But Hurricane Barry was not as destructive as feared after making landfall on the Louisiana coast on Saturday with winds barely meeting hurricane criteria," he said. “For that reason, crude oil speculators evidently took profit on Monday, which saw prices fall noticeably.”

“Monday’s selling did indeed look like it was driven by profit-taking and technical selling given the small ranges oil prices had traded around in the closing days of last week,” said Razaqzada. “A burst of bullish momentum earlier in [last] week had probably seen speculators tighten their stop loss orders to protect their profits from evaporating in what is a headline-driven market.”

U.S. oil inventories data are due out from the Energy Information Administration on Wednesday. Trade group the American Petroleum Institute will issue its own figures late Tuesday. Analysts expect the government report to reveal a fall of 4.2 million barrels in crude supplies, on average, for the week ended July 12, according to a survey conducted by S&P Global Platts. Gasoline stockpiles are expected to fall by 1.5 million barrels, while distillate supplies are seen higher by 300,000 barrels, the survey showed.

“If we see more unexpectedly sharp de-stocking in crude inventories, then this could keep prices supported for a while yet. However, if a bigger build is reported then this will likely give speculators an excuse to sell oil aggressively after the recent rally,” said Razaqzada.

In other energy trade, August gasoline  fell 3.9 cents, or 2%, to $1.8918, while August heating oil  lost 4.7 cents, or 2.4%, to $1.9049 a gallon.

August natural gas  fell 10.2 cents, or 4.2%, to $2.306 per million British thermal units, with analysts citing lower demand, amid forecasts for below normal temperatures as well as recent power outages tied to the Gulf storm, for the price decline.

Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

This Story has 0 Comments
Be the first to comment
More News In
Investing

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.