Investing.com – Impending Iranian sanctions and Saudi-West tensions were barely able stop the slide in oil prices, suggesting crude could fall to below $65 per barrel this week, traders say.
A fifth-weekly stockpile rise could also be the next shoe to drop on the West Texas Intermediate (WTI) crude market, especially if it’s another outsize build. Traders note that WTI is already in contango mode, where the front-month is at a discount to its second most-active contract and such a weak structure would be more vulnerable to any announced by the U.S. government Wednesday.
In Monday’s market, ’s most-active contract, December, was 10 cents higher at $69.22 per barrel by 1:11 PM ET (17:11 GMT) after sliding to a session low of $68.47 earlier.
“Long-dated charts are targeting $64 for WTI, and that’s become a downside objectives for technicians,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Tariq Zahir, managing member of oil-focused fund Tyche Capital Advisors in New York, also thinks U.S. crude futures could get below $65 this week, especially if Wall Street tanks or Treasury yields spike again.
“WTI has been into a contango for a while and this should continue to put pressure on spot prices. If the S&P closes below 200-day moving average or the 10-year yield breaks the recent high, we will go into another risk-off mode and that could really clobber WTI to the sub-$65 level,” Zahir said.
, the global benchmark for oil, traded 3 cents higher at $79.81 per barrel for its front-month December contract.
U.S. sanctions against Iranian oil exports, due on Nov. 4, had boosted oil prices by more than 20% initially this year.
But the fear factor attached to Iran has worn off in recent weeks after reports by the , OPEC and the West’s energy watchdog IEA indicated comfortable and growing supplies for oil. U.S. oil services firm Baker Hughes, meanwhile, has reported the U.S. at 3-1/2 year highs, indicating more drilling for crude.
Brent was also pressured by Saudi Oil Minister Khalid al-Falih’s remarks on Monday that the kingdom has of unleashing a 1973-style oil embargo on Western consumers, despite its worsening crisis from allegations that it murdered journalist Jamal Khashoggi. Instead of restricting supplies, Saudi Arabia would do utmost to increase them, the minister said.
“They want to be seen as the Steady Eddie of the market and they’re overcompensating supply to distract attention from the Khashoggi matter. That can’t be good for prices,” Kilduff said.
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Source: Investing.com
