Brent crude falls below US$30/barrelNews // January 15, 2016
Brent fell below the US$30 per barrel earlier this week for the first time in 12 years – WTI had already dipped briefly below this threshold.
Commerzbank Research said Brent is currently priced lower than WTI, which has very rarely been the case in the past five years and can be explained by the prospect of oil supply from Iran already increasing in the near future.
The International Altomic Energy Agency is expected to announce shortly that Iran has met the conditions set out in the nuclear agreement reached last July and will therefore pave the way this weekend for sanctions to be lifted. Iran has announced on a number of occasions that it wishes in this event to immediately scale up its oil exports by 500,000 barrels per day. Within six months, oil deliveries are to rise by a total of 1 million barrels per day.
"This could drive prices down further in the short term purely on the basis of the psychological effect," said Commerzbank. "Having said that, the Iranian return to the oil market is not really news any more. What is more, a leading representative of the state Iranian oil company NIOC recently announced that Iran wished to expand supply only slowly in order not to put further pressure on prices."
Inventory data published by the US Department of Energy likewise put pressure on prices: the renewed sharp increase in US gasoline and distillate stocks in particular weighed on sentiment. Gasoline stocks have climbed by 19 million barrels in the last two weeks, while distillate stocks have surged by 12.4 million barrels. The acute weakness of distillate demand in the US is also striking: last week, it dropped to its lowest weekly level in nearly 17 years even though it is currently winter – the period of highest demand.