Oil falls after U.S. output hits record

07 May, 2018, 07:07 | Author: Brooke Harris

Oil headed for a weekly gain as Iran called for the United States to comply with commitments it made under a 2015 nuclear deal that lifted punishing sanctions on OPEC's third-largest producer.

The concerns added to worries over a looming decision on whether the United States will walk away from a deal with Iran and instead re-imposes sanctions on Tehran, keeping global oil markets on edge. US President Donald Trump is facing a May 12 deadline to decide whether to withdraw from the deal and reimpose sanctions, imperiling the deal as a whole and restricting the flow of Iranian oil.

Prices added as much as 0.3 percent to $69.91 a barrel after a 1.9 percent gain on Friday. US energy companies added oil rigs for a fifth straight week, with higher crude prices boosting profits and pushing nationwide production to record highs. New sanctions could disrupt crude exports from the Organization of Petroleum Exporting Countries' third-largest producer.

Oil prices were little changed after rising earlier, as market jitters kicked in over the prospect of geopolitical risks from possible new US sanctions against Iran. US production also hit a new weekly record of 10.62 million bpd - putting it ahead of Saudi Arabia, the biggest OPEC producer and just below top producer Russian Federation. "While there could be profit-taking given current oil prices, it will be limited as concerns over Iran are rising".

Friday marks the end of another unsteady week on crude markets, as fundamental signals battled with geopolitical jitters. Total volume traded was about 17% below the 100-day average. It was on track to gain just over 2.3 percent on the week. Brent crude oil was up 10 cents at $73.72 a barrel by 1315 GMT.

"Avengers: Infinity War" continues to dominate North American box office
War will zip past Ultron's $459 million domestic total on Monday and the first Avengers' $623 million by the end of its run. Both Tully and Bad Samaritan had rather small opening weekends, but they still did well enough to make it into the top 10.

Stay long a December 2018 WTI $68-75/bbl call spread (net premium: $1.40/bbl).

Iran intensified its criticism of Trump ahead of a May 12 deadline he's set for making a decision on the accord, stating that there's "only one way forward and it's USA compliance, not appeasement".

With the stock market falling, Rob Haworth, senior investment strategist for US Bank Wealth Management, said he would expect oil prices to be lower than they now are. Meanwhile, America's European allies continue to back it, saying the deal has been essential to reining in Iran's nuclear program. While he made no mention of the multiparty nuclear accord that eased sanctions on Iran starting in January 2016, he warned that the insertion of politics into the energy market will hurt producers and consumers alike.

The Persian Gulf country's regional arch-rival Saudi Arabia is said to want crude closer to $80 a barrel, in part to support a stake sale in its state energy giant.

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