Oil Heads for Weekly Loss
(Bloomberg) -- Oil headed for its first weekly drop since early March as uncertainty over the future of global producer curbs, Iranian exports and U.S. inventories kept investors on edge.
New York futures traded below $64 a barrel, holding a 0.5 percent loss from the previous session. While government data Wednesday showed U.S. inventories slid last week, the drop was less than half what an industry report indicated. Meanwhile, as speculation swirls over whether OPEC and its allies will extend output cuts, Asian buyers of sanctioned Iranian oil are said to be putting purchases on hold as they await a White House decision on waivers.
While oil has advanced over 40 percent this year on the back of the OPEC+ coalition’s supply curbs, the rally’s run out of steam in the past couple of weeks. May could be a pivotal month for the market as the U.S. decides on whether to extend waivers allowing some countries to keep buying Iranian crude, while a meeting of the Organization of Petroleum Exporting Countries and its allies in Saudi Arabia may provide clues on future production levels.
“Investors are taking a wait-and-see stance ahead of events in May, including the expiry of waivers on U.S. sanctions on Iran and the OPEC meeting,” said Kei Kobashi, a senior analyst at Sumitomo Corporation Global Research Co. “It will remain difficult to make bets until May because there is so much uncertainty.”
West Texas Intermediate for May delivery fell 4 cents to $63.72 a barrel on the New York Mercantile Exchange as of 7:46 a.m. in London. The contract dropped 29 cents to $63.76 on Wednesday. It’s down 0.3 percent since April 12. Both WTI and Brent won’t trade on Friday due to holidays.
Brent for June settlement dropped 7 cents to $71.55 a barrel on the London-based ICE Futures Europe exchange. The contract fell 10 cents to $71.62 on Wednesday and is steady for the week. The global benchmark crude was at a premium of $7.74 to WTI for the same month.
Before the EIA released its crude inventories data on Wednesday, which showed the first drop in four weeks, the API was said to report a decline of 3.1 million barrels. The median forecast in a survey of analysts by Bloomberg before the government data pointed to an increase of 2.3 million barrels in U.S. stockpiles.
Russian Energy Minister Alexander Novak said Wednesday there would likely be discussions about whether OPEC and its allies would extend production cuts at their meeting in Jeddah next month. His nation’s average output cuts in April will conform to the OPEC+ coalition’s deal, he said, adding that it’s too early to talk about possible options for the group in regards to the future of the output reductions.
Most Asian crude buyers are avoiding imports from Iran for next month as it’s unclear what will happen to the U.S. exemptions that are set to expire in the first week of May, people with knowledge of the matter said earlier this week. Even if the waivers are extended, it would be too late to order and receive cargoes for the month, the people said.
--With assistance from James Thornhill.To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Andrew Janes
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