By Nigar Abbasova
The hit-and-miss tendency remains dominating in the oil market due to high dependence of the landmark oil cut deal of major producers.
Negative dynamics returned to the market on January 9 reflecting a surge in exports from Iran and increased activity of U.S. drillers for a tenth straight week.
Brent crude futures were trading at $56.70 per barrel, 40 cents, or 0.7 percent down from their previous close, while U.S. West Texas Intermediate (WTI) stood at $53.59 per barrel recording a decrease of 40 cents, or 0.74 percent, Reuters reported.
Drop in prices came as a result of rising exports from Iran, which sold more than 13 million barrels of oil held on tankers at sea. The volume of Iranian oil held at sea has reportedly dropped to 16.4 million barrels, from 29.6 million barrels in early October. The oil sold in recent months was directed to buyers in Asia including China, India and South Korea and to European countries including Italy and France.
The exemption of the Islamic Republic from the cut deal was hailed in the country as an energy policy victory. Iran successfully argued it should not limit its production as it slowly started to recover following the lifting of long-standing international sanctions in early 2016.
However, Iran's surging tanker exports were not the only indicator of plentiful supplies. U.S. energy companies added oil rigs for a tenth week in a row, increasing their number up to 529, the highest figure since December 2015, according to Baker Hughes.
An additional non-supportive sign came from OPEC’s second-biggest producer Iraq that hit a record export volume of 3.51 million bpd from its port in Basra in December. However, the country is eager to comply with its commitment to lower output by an average of 210,000 bpd from January.
Analysts say that the next increase in prices is not expected to occur until the market receives evidence that production levels are falling.
Oil price predictions by major organizations and investment banks are generally ranging at the level of $50-$60 per barrel.
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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