Oil Sinks As Iran Threatens To Worsen Supply Glut

Crude oil futures slid deeper into the bear terrain on Friday, sliding by over 5 per cent in the domestic market and plunging further below the USD 30 per barrel mark to a fresh 12-year low in the overseas market as a removal of sanctions against Iran threatened to worsen a supply glut.

Oil Sinks As Iran Threatens To Worsen Supply Glut
Iran, the OPEC's fifth largest crude oil producer, said that it is getting ready to increase its shipments by 500,000 barrels per day after the lift-off of West-imposed sanctions against the Islamic Republic over the weekend, threatening to deepen a global supply surplus.

A smaller than expected dip in US oil rig count signaled fears that US production may remain near record high levels, going forward. Baker Hughes said that the number of rigs drilling for oil in the US fell by 1 to 515 last week.

Contractions in US retail sales & factory output which signaled renewed concerns over the health of the world's biggest economy clouded the demand outlook for the fuel. Capping off the weakest year since 2009, US retail sales dipped 0.1 per cent in December while factory output fell for a second month on the trot, down 0.1 per cent last month.

A gauge measuring manufacturing in New York City tumbled to -19.37 in January from -6.21 in December, with a reading below 0 signaling contraction. However, an index of US consumer confidence rose to a seven-month high of 93.3 in January from 92.6 in December.

Oil may extend a slump today on oversupply worries amid an immediate influx of Iranian oil to the market.

At the MCX, Crude oil futures, for the January 2016 contract, closed at Rs 1,996 per barrel, down by 5.54 per cent, after opening at 2,110, against the previous close price of Rs 2,113. It touched an intraday low of Rs 1987.

Read more about: crude oil
Story first published: Monday, January 18, 2016, 12:50 [IST]
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