Oil futures were in retreat Monday on reports that the Trump administration was softening its hard line on Iran crude exports and might allow waivers for some buyers when sanctions against the Islamic Republic’s crude exports go back into effect in November.
U.S. benchmark West Texas Intermediate crude for November delivery CLZ8, -0.55% on the New York Mercantile Exchange was off 64 cents, or 0.9%, to $73.70 a barrel. Brent crude, the global benchmark, for December delivery LCOZ8, -0.76% fell 76 cents, or 0.9%, to $83.40 a barrel on ICE Futures Europe.
A U.S. government official said the Trump administration is considering waivers on sanctions for countries that are reducing imports of Iranian oil, Reuters reported on Friday.
“The U.S. appears to be abandoning its tough stance on buyers of Iranian oil,” wrote analysts at Commerzbank. “It appears that consumer countries are to be given more time after all to replace their oil shipments from Iran so long as they at least reduce them significantly.”
India is said to be one of the countries, the Commerzbank analysts noted, and reportedly has plans to buy 9 million barrels of crude from Iran in November, equivalent to 300,000 barrels a day after importing just shy of around 500,000 barrels a day in September. If other consumers, including the European Union, Japan and South Korea are also allowed to continue buying Iranian crude, worries about tightening supply toward year-end could also be soothed, the analysts wrote.
Concerns about the hit to global supply from the reimposition of sanctions have been credited with the run-up in crude prices that took Brent above $86 a barrel to trade at a nearly four-year high last week, while WTI moved above $76.
Brent rose 1.7% last week, while WTI rallied 1.5%.
In other energy trade, November gasoline futures RBX8, -0.19% fell 0.3% to $2.08 a gallon, while November heating oil HOX8, -0.37% declined 0.5% to $2.38 a gallon.
Meanwhile, natural-gas futures extended their gains from last week to reach new multiweek highs as U.S. supplies remained tight.
Tyler Richey, co-editor of the Sevens Report, said U.S. inventories of the fuel are at five-year lows. “The market will be focused on weather as a late-season hurricane in the Gulf or colder-than-average temperatures could trigger a continuation higher, while moderate weather would likely see a profit-taking pullback after the recent spike,” he said.
Meanwhile, Hurricane Michael was expected to move across the eastern Gulf of Mexico on Tuesday and inland over Florida Wednesday, according to the U.S. National Hurricane Center. It’s not immediately clear if the storm system, which just recently achieved hurricane status, will impact energy production in the region.
November natural-gas futures NGX18, +4.55% rose 12.8 cents, or 4.1%, to $3.271 per million British thermal units, continuing to trade at their highest since January.
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