Futures Movers: Oil prices bounce as Iran sanctions kick in

Oil futures climbed Monday, finding solid footing on higher ground as U.S. sanctions on Iranian oil take hold, though the Trump administration’s decision to grant waivers to eight buyers of the country’s crude has helped to limit the price gains.

The rebound sees crude attempting to bounce back from a sharp October selloff that pushed both the global and U.S. benchmarks into correction territory.

Meanwhile, natural-gas futures jumped by more than 7% in Monday dealings, buoyed by expectations that cold weather will lead to a significant lift in demand.

West Texas Intermediate crude for December

CLZ8, +0.32%

 rose 56 cents, or 0.9%, to $63.70 a barrel on the New York Mercantile Exchange. January Brent crude

LCOF9, +0.48%

the global benchmark, rose $1.05, or 1.4%, to $73.88 a barrel on the ICE Futures Europe exchange.

The renewed sanctions took effect Monday, but the Trump administration late last week announced it granted waivers to eight countries, which it identified Monday as China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey, Here’s what U.S. waivers on Iran oil sanctions mean for the global crude market

Other countries not granted the waivers, but that are significant importers of Iranian oil include France, Spain and the United Arab Emirates, said James Williams, energy economist at WTRG Economics.

“The important thing to remember is that those waivers are not 100% but rather some unknown reduction. Some will go to zero eventually,” he said.

Read: Defiant Iranian president promises to ‘break’ new U.S. sanctions

In a note, analysts led by Eugen Weinberg, head of commodity research at Commerzbank pointed out that oil futures had been under pressure in recent weeks well before the waivers were granted, with Brent slumping more than 14% over the past four weeks as both it and WTI, the U.S. benchmark, fell into correction mode, widely defined as a fall of 10% from a recent peak. The weakness reflected growing confidence that increased output by Saudi Arabia and Russia would offset much of Iranian crude lost to the sanctions.

Read: Why oil prices are plunging despite U.S. sanctions on Iran’s energy sector

“The more than 14% correction that Brent has seen since the beginning of last month illustrates how the market has moved from a place where the loss of Iranian crude was providing maximum support, including to the physical crude market, to a point where the most extreme scenarios for constraints on Iranian crude—including those which had been reiterated for the longest time by U.S. authorities—are now being disregarded even as sanctions formally take effect,” wrote analysts at JBC Energy, a Vienna-based consulting firm.

In other energy trading, December natural gas

NGZ18, +6.46%

was up 7.5% to $3.531 per million British thermal units in heavy volume after hitting a nine-month high at $3.57.

Analysts at TFS Energy, in a note, said the surge was fueled by forecasts indicating well-below normal temperatures and elevated heating demand across the much of the country in the coming weeks.

With the injection season coming to an end, the market is eyeing peak storage level to be around 3.2 trillion cubic feet this year, which is about 600 cubic feet below the five-year average, said Robbie Fraser, commodity analyst at Schneider Electric.

Meanwhile, December gasoline

RBZ8, -0.55%

 rose 0.2% to $1.712 a gallon, while December heating oil

HOZ8, +0.90%

 rose 1.5% to $2.205 a gallon.

Want news about Asia delivered to your inbox? Subscribe to MarketWatch’s free Asia Daily newsletter. Sign up here.

We Want to
Hear from You

Join the conversation

الموقع يستعمل RSS Poster بدعم القاهرة اليوم