Gas prices often vary widely from the direction of crude oil prices and can depend on dozens of other factors like where the fuel comes from and the time of year. “If nothing gives, production will have to be shut in through the price mechanism, and it will take $40 or lower WTI to get to that level”, Morse said.
If Iranian oil is slow to return to the global market and volumes disappoint, then the flattening in the futures curve of recent months looks overdone. This has also brought down India’s oil import bill by almost 50%. “Today’s sluggish global economy doesn’t hold out much hope for oil demand playing a major role in reducing the growing overhang of inventories”.
But we are now lifting export sanctions on Iran’s ability to export crude oil?
But it is likely to face stiff competition for its main Asian markets from fellow OPEC members such as Saudi Arabia, Kuwait and Iraq.
But the balance of risks appears more tilted toward the cautious view of the return of Iranian oil, given that the agreement with the six powers contains numerous steps, and any time the complexity of implementation is high, the likelihood of delays increases.
USA gold futures for August delivery settled down 0.2 per cent at $1,153.50.
The second issue Rosenberg cited for the weakness of the market is that the independent oil producers in the US are proving to be incredibly resilient.
“However, I feel much caution should be exercised and it is important to observe the Chinese markets in the coming sessions before calling it a bottom”, he said in a market commentary. Unfortunately, the experts agree that is also hard to predict.
The report sparked concerns that increasing efficiency and lower costs are enabling shale-oil producers to keep production steady despite huge spending cuts, meaning the global oil glut may not shrink as quickly as some market watchers had expected.
Industry chambers were quick to welcome the Iran deal, while one of them is already looking at opening its office in the capital Teheran.
Fractured carbonate reservoirs such as Iran’s require gas injection to maintain field pressure and enhance oil recovery.
An official at the National Iranian Oil Company said on Wednesday that Iran’s oil production can increase by 500,000-600,000 barrels per day (bpd), confirming the prospect of a ramp-up in supply from the Islamic republic, Reuters reported. With this decline, oil prices dropped below the trading range established over the past few months. Historical daily oil price movements are close to being normally distributed, with small daily increases and large daily decreases occurring slightly more frequently than would be expected in a ideal normal distribution. But it noted that some of this demand will be met by biofuels and natural gas.