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Oil Retreats Despite Supportive Fundamentals

October 8, 2018 at 19:22 by Vladimir Vyun

Crude oil fell today, reversing its rally. Oil prices were rising earlier on reports that exports from Iran was falling due to US sanctions. Iran Oil Minister Bijan Namdar Zanganeh said that the claims by Saudi Arabia that it will be able to replace Iranian supply were exaggerated. Additionally oil producers shut down 19% of oil production and 11% of natural gas production in the US Gulf of Mexico due to the threat from Hurricane Michael. And on top of that, market participants were hoping that stimulating measures from China will increase oil consumption in the world’s second biggest economy.

Yet despite all the supportive fundamentals, crude oil was unable to hold onto gains. Market analysts explained that by the news that the US government considers waivers on sanctions for those countries that reduce their import of Iran’s oil significantly.

November futures on WTI crude oil dropped 0.19% to $74.20 per barrel as of 19:05 GMT on NYMEX today. December contract for Brent crude slumped 0.42% to $83.81 per barrel on ICE. Meanwhile, November contract for natural gas jumped 3.98% to $3.27 per million British thermal units on NYMEX, reaching a new multi-week high as US supply remained tight.

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