Oil falls below $61 despite UN sanctions on Iran
US crude fell $1.56 to $60.85 a barrel by evening, while Brent crude dropped by $1.54 to $60.88 a barrel.
By TNN |
LONDON: Oil futures plunged over a dollar to less than $61 a barrel on Tuesday, extending losses last week, as mild weather in the US curbed demand for winter fuel. The slide wiped out early gains that were driven by worries Iran might disrupt oil flows in response to UN sanctions.
US crude fell $1.56 to $60.85 a barrel by evening, while Brent crude dropped by $1.54 to $60.88 a barrel.
Oil markets were closed on Monday and public holidays across Europe on Tuesday meant trading volume was thin. After briefly touching a three-month high last Wednesday, prices fell just over a dollar last week as mild weather in top heating consumer the US Northeast began to trigger selling.
“The weather still dominates the demand picture,” said Steve Bellino, senior vice-president for energy risk management at Fimat USA.
The market initially rose on Tuesday, reaching a session high of $63.20 for US crude, after the UN Security Council agreed on Saturday to impose sanctions on Iran’s trade in nuclear materials and technology, drawing a warning from Tehran.
“If necessary, Iran will use any weapon to defend itself,” oil minister Kazem Vaziri-Hamaneh was quoted as saying by the semi-official Fars news agency on Tuesday. In the past he has said Iran would rather not play the oil card. Iran, the world’s fourth-largest crude producer, has condemned the UN resolution as illegal and on Sunday vowed to speed up enrichment work, which could heighten tensions.
Prices also drew some support after Abu Dhabi’s state oil firm, the main producer in the United Arab Emirates, said it would cut exports of nearly half its crude grades by 3-5% in February.
The statement was the first sign the Organisation of the Petroleum Exporting Countries intended to comply with a second round of output reductions agreed this month. The new 500,000 barrels per day cuts are scheduled to take effect in February, giving the producer group time to assess whether peak winter demand will be enough to reduce swollen oil inventories in consumer nations.
US crude fell $1.56 to $60.85 a barrel by evening, while Brent crude dropped by $1.54 to $60.88 a barrel.
Oil markets were closed on Monday and public holidays across Europe on Tuesday meant trading volume was thin. After briefly touching a three-month high last Wednesday, prices fell just over a dollar last week as mild weather in top heating consumer the US Northeast began to trigger selling.
“The weather still dominates the demand picture,” said Steve Bellino, senior vice-president for energy risk management at Fimat USA.
The market initially rose on Tuesday, reaching a session high of $63.20 for US crude, after the UN Security Council agreed on Saturday to impose sanctions on Iran’s trade in nuclear materials and technology, drawing a warning from Tehran.
“If necessary, Iran will use any weapon to defend itself,” oil minister Kazem Vaziri-Hamaneh was quoted as saying by the semi-official Fars news agency on Tuesday. In the past he has said Iran would rather not play the oil card. Iran, the world’s fourth-largest crude producer, has condemned the UN resolution as illegal and on Sunday vowed to speed up enrichment work, which could heighten tensions.
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Oil prices rose earlier in the year because of fears Iran might cut its oil exports or disrupt Gulf shipping as its row with the West over its nuclear programme escalated. The issue had faded since summer as the UN appeared unable to agree on how to deal with Tehran. Analysts said traders would probably disregard the latest developments unless they saw evidence of supply disruption. Prices also drew some support after Abu Dhabi’s state oil firm, the main producer in the United Arab Emirates, said it would cut exports of nearly half its crude grades by 3-5% in February.
The statement was the first sign the Organisation of the Petroleum Exporting Countries intended to comply with a second round of output reductions agreed this month. The new 500,000 barrels per day cuts are scheduled to take effect in February, giving the producer group time to assess whether peak winter demand will be enough to reduce swollen oil inventories in consumer nations.
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