Free Demo

Oil slips after entering bull market on Kurdish export threat

Oil slips after entering bull market on Kurdish export threat

Oil prices slipped after entering a bull market amid heightened geopolitical tensions in the Middle East, while Trafigura Group and Citigroup Inc. both warned of a looming supply squeeze.

Crude in New York fell 0.7% as traders cashed in after yesterday’s 3.1% surge. The oil market is nearing the end of the “lower-for-longer” era, with a shortage likely in 2019, trading house Trafigura said Tuesday. In Turkey, President Recep Tayyip Erdogan threatened to “close the valves” on oil shipments from Kurdistan after the Iraqi region held a vote on independence. 

Oil has gained almost 10% this month on forecasts for rising consumption and as members of the Organization of Petroleum Exporting Countries maintain output cuts to drain a global glut. The market rebalancing has helped flip the futures curve into backwardation, a structure where immediate deliveries of oil are more expensive than longer-dated ones, signaling strong demand. Brent prices jumped to a two-year high on Monday before retreating Tuesday.

“It’s pure profit-taking,” Torbjorn Kjus, an oil-market analyst at DNB Bank ASA in Oslo, said by phone. “It’s very natural. The most natural thing would be if we lose some more during the day, but so far it’s holding up almost unexpectedly well after that very large rally yesterday.”

West Texas Intermediate for November delivery was at $51.86/bbl on the New York Mercantile Exchange, down 36 cents, at 8:46 a.m. local time. Total volume traded was 31% above the 100-day average. Prices surged to $52.22 on Monday, more than 20% above their most recent low -- a definition of a bull market.

Brent for November settlement dropped 75 cents to $58.27/bbl on the London-based ICE Futures Europe exchange after rising as much as 0.8% earlier. Prices advanced $2.16 to $59.02 on Monday, the highest close since July 2015. The global benchmark traded at a premium of $6.41 to WTI on Tuesday.

The effect of OPEC’s curbs could be amplified if the vote in the Iraqi enclave of Kurdistan provokes a political crisis, threatening more than 500,000 bpd of shipments to global markets. Ankara opposes an independent Kurdish state and has economic leverage because the export pipeline runs through Turkey to the Mediterranean. Oil from fields controlled by the Kurdish Regional Government and the federal Iraqi government’s North Oil Co. was flowing normally through the pipeline on Monday, according to two people familiar with the matter, who asked not to be identified discussing confidential information.

High-volume of Loyal and Trusted Customers!

We feel proud in offering export-import data information services to our respected clients.

Obtain a free import-export sample report on desired products.

We do not provide any assistance directly in selling or Buying any product.

5 + 3

Thank You

Big thanks to showing your interest in SEAIR Exim Solutions. We’ve currently received your request for data information. We will return on the same query in a short span of time.