Market Report & Analysis for 10/10/2018 Morning Edition

Morning Market Overview

New York Mercantile Exchange oil futures nearest to delivery and the Intercontinental Exchange Brent contract settled shallowly mixed, with ULSD and the crude grades moving off one-week lows and the RBOB contract a two-week low traded overnight on short covering.

The crude grades ended slightly lower and oil products edged modestly higher. Oil futures swung to their lows on news that the United States was actively considering waivers from U.S. sanctions on Iranian oil exports for India, and is considering requests from other buyers of Iran’s oil. India complained that high oil prices would slow the country’s economic growth, with India the world’s largest democracy.

The United States will impose a second round of sanctions on Iran on Nov. 4 that target the country’s oil exports and banking sector, with an initial round of sanctions taking effect in early August. U.S. officials have spanned the globe, telling buyers of Iranian oil that they would face financial punishment if they didn’t stop those purchases by the Nov. 4 deadline. Iran’s oil exports are estimated at 1.5 million bpd in September, down about 700,000 to 800,000 bpd from the second quarter.

Backstopping the bearish news, Saudi Arabian Crown Prince Mohammed Bin Salman said Saudi Arabia was producing near a record high at 10.7 million bpd, and could lift production to 12.0 million bpd if necessary to offset lost Iranian oil barrels. ICE December Brent settled down $0.25 at $83.91 bbl, paring a decline to $82.66 bbl. NYMEX November WTI futures settled down $0.05 at $74.29 bbl, erasing most of the loss to a $73.07 one-week low. Session losses for the WTI contract were nearly erased on light short covering as offshore drillers in the Gulf of Mexico begin precautionary shut-ins ahead of Tropical Storm Michael.