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US Crude Craters 3% As Trump Proposes Easing Sanctions on Iran

September 11, 2019 at 18:03 by Andrew Moran

US crude oil is cratering as much as 3% midweek after President Donald Trump suggested that the White House could ease sanctions on Iran in order to renew negotiations. Oil futures were trading higher to kick off the session after the federal government reported a bigger-than-expected decline in domestic stockpiles.

October West Texas Intermediate (WTI) crude futures fell $1.54, or 2.68%, to $55.83 per barrel at 17:46 GMT on Wednesday on the New York Mercantile Exchange. Oil prices have fallen 0.2% so far this week, but they are still up 22% on the year.

Brent, the international benchmark for oil prices, is also tumbling in the middle of the trading week. November Brent crude futures slumped $1.49, or 2.39%, to $60.89 a barrel on London’s ICE Futures exchange. Brent has traded in the opposite direction, advancing 0.7% so far this week. Year-to-date, prices have risen more than 12%.

According to the US Energy Information Administration (EIA), domestic crude inventories tumbled by 6.9 million barrels for the week ending September 6, which is bigger than the market forecast of 3.6 million barrels. Distillate supplies rose 2.7 million barrels, while gasoline stockpiles shed 1.4 million barrels.

The US Baker Hughes total oil rig count clocked in at 738, down from 742 in the previous week.

On Wednesday, Bloomberg News reported that President Trump is considering easing sanctions on Iran so he can meet with President Hassan Rouhani at the end of the month.

Despite US-Iran relations intensifying this past summer, Trump said that Tehran is eager to reach a new deal. It is being reported that the administration is trying to arrange for Trump to meet with Rouhani later this month in New York during the annual United Nations General Assembly. Some are noting that Trump could sit in a meeting between French President Emmanuel Macron and Rouhani.

In June, the US alleged that Iran had attacked oil tankers and a US drone near the Strait of Hormuz, though the regime has denied any involvement. Tehran also noted that the drone was in Iranian airspace. Soon after the incident, President Trump signed an executive order that slapped new sanctions on the oil-rich nation.

In other energy commodities, October natural gas futures slipped $0.025, or 0.95%, to $2.55 per million British thermal units (btu). October gasoline futures dipped $0.01, or 0.75%, to $1.57 a gallon. October heating oil futures fell $0.025, or 1.32%, to $1.905 per gallon.

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