Oil Slides on Iran Comments, Stronger Dollar
August 30 2016 - 3:00PM
Dow Jones News
NEW YORKâOil prices fell Tuesday on a report that Iran plans to
increase its production by year-end and a strengthening dollar.
U.S. prices for October delivery recently fell 58 cents, or
1.2%, to $46.40 a barrel on the New York Mercantile Exchange.
Brent, the global benchmark, fell 94 cents, or 1.9%, to $48.32 a
barrel on ICE Futures Europe.
Bloomberg News reported Tuesday that an Iranian deputy minister
said at a conference that the country plans to boost its output by
200,000 barrels a day by the end of the year.
Iran has repeatedly said that it plans to increase its
production now that international sanctions have been lifted.
Iran's unwillingness to freeze its output thwarted an attempt by
other members of the Organization of the Petroleum Exporting
Countries to reach a coordinated production deal in April.
OPEC plans to discuss a production freeze again in September,
and the latest report makes it appear less likely that Iran will
participate in any agreement, said Bob Yawger, director of the
futures division at Mizuho Securities USA Inc.
The report is a "double whammy," he said, because it suggests
that global production will increase and that OPEC will fail to
reach a deal.
A stronger dollar also weighed on oil prices Tuesday. The WSJ
Dollar Index, which measures the dollar against other currencies,
rose to a one-month high Tuesday as investors continued to assess
the outlook for U.S. interest-rate increases this year. A stronger
dollar can make oil, which is traded in dollars, more expensive for
buyers using foreign currencies.
Prices have hovered in a narrow trading range in recent sessions
amid conflicting views about how quickly the global glut of crude
is set to shrink.
Stockpiles of crude oil and petroleum products around the world
remain ample, with U.S. inventories at record highs. Storage data
for the week ended Aug. 26 is due Wednesday from the Energy
Information Administration. The American Petroleum Institute, an
industry group, is set to release its own data for the same week
later Tuesday.
Gasoline futures recently fell 1.6% to $1.4430 a gallon. Diesel
futures fell 1.1% to $1.4695 a gallon.
Chelsey Dulaney contributed to this article.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
August 30, 2016 14:45 ET (18:45 GMT)
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