Crude Slides in Late-Day Selloff

Oil futures fell nearly 2% in a late-day selloff after reports emerged saying the European Union's possible embargo of Iranian oil imports would likely be delayed up to six months. New York Mercantile Exchange crude ended up closing below $100 a barrel for the first time in 2012.

Light, sweet crude futures for February delivery ended the day down $1.77, or 1.8%, at $99.10 a barrel on the Nymex. Brent crude on the ICE Futures Europe exchange was down $1.06, or 1%, at $111.18 a barrel. Nymex futures had not closed below $100 a barrel since Dec. 30.

European Union officials announced an agreement in principle Jan. 4 to halt imports of Iranian oil because of Iran's nuclear development program, sending the oil market higher that day to a close of $103.22. Still, the announcement at the time lacked a concrete timeline and offered little in the way of precise parameters.

Iran is the world's third-largest oil supplier, exporting 2.5 million barrels per day to global markets. If European countries reduced use of Iranian oil, it would increase dependence on other sources, tightening the global supply-and-demand balance.

Futures had been trading higher all day Thursday, driven higher by word of a possible shutdown of Nigerian oil exports and a stronger euro, even as the market looked past bearish new economic data and weak U.S. fuel demand fundamentals. But it began a steep selloff with less than an hour to go in the session as multiple news agencies, citing unnamed EU officials, said Europe's Iran oil embargo could be delayed.

"That's been the real driver behind this late-day selloff," said Matt Smith, an analyst at research firm Summit Energy. "That's been the only thing keeping prices in triple digits. Once you take the Iranian piece out of the puzzle, we're left with poor economic data and poor U.S. fundamental crude data. This is definitely an unwinding of that [Iran] premium."

Front-month February reformulated gasoline blendstock, or RBOB, lost 3.2 cents, to $2.7313 a gallon. February heating oil dropped 1.05 cents to $3.0541 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Clyde Patton | Jan. 13, 2012
Why don't you ever give diesel prices the same as Gasoline blendstock, when you report this? It is as important as gas.


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Project Coordinator, Pipeline Construction
Expertise: Project Management
Location: Spring, TX
Project Manager
Expertise: Project Management
Location: Kennesaw, GA
Senior Project Manager
Expertise: Project Management
Location: San Francisco, CA
search for more jobs

Brent Crude Oil : $50.56/BBL 0.15%
Light Crude Oil : $47.7/BBL 0.70%
Natural Gas : $3.05/MMBtu 1.32%
Updated in last 24 hours