Oil sinks to six-month low on china outlook, Iran supply boost
BNN Bloomberg
Oil extended losses at the start of the week as traders weighed concerns about Chinese demand and the prospect for more Iranian supply on the back of Monday announcements.
West Texas Intermediate plunged as much as 5.7 per cent to as low as US$86.84 a barrel, the lowest in more than six months. Oil retreated since China announced a surprise cut in key interest rates on the back of weak economic data, while a nuclear deal with Iran that could boost a tight supply outlook looks closer after announcements on Monday.
Some of the potential additional flows of Iranian oil to the global market have already been priced in, according to Ole Hansen, head of commodity strategy, at Saxo Bank A/S. But “any additional supply news will give ammunition to funds selling oil as a hedge against an economic slowdown,” he said.
After over a year of stalled and canceled talks, a nuclear deal with Iran looks more likely than it has done for months. A spokesperson for the Iranian foreign ministry said there could be a basis for a signed agreement “in the very near future,” while Foreign Minister Hossein Amirabdollahian said in a separate briefing that the country would inform the European Union tonight of it’s position regarding a final draft text for a finalized nuclear deal, while striking a more conciliatory tone than in recent months.
