Thursday's Market Minute: Kicking Crude When It's Down
After closing down 2.87% on Wednesday, crude oil futures are continuing lower this morning after an OPEC+ meeting resulted in no more supply cuts. Thursday’s meeting focused instead on compliance and bringing participating countries’ output down to quota.
Despite yesterday’s reported draw in inventories, crude oil futures fell sharply on fears President Trump may ease sanctions on Iran. After Trump announced Tuesday he fired John Bolton as national security adviser, reports suggested the firing was due to push back on the president’s plan to ease sanctions on Iran and to sit down with Iranian president Rouhani at the U.N. General Assembly later this month. In a tweet, Trump said he “disagreed strongly with many of [Bolton’s] suggestions,” prompting him to ask for Bolton’s resignation. Bolton was a known hard-liner on issues of foreign policy, especially in regard to Iran, China and Venezuela.
With Bolton gone, investors fear an easing of sanctions that will allow Iran to produce more crude oil exports and expand global crude supplies. On Wednesday, the EIA reported a draw in crude oil inventories of 6.9M barrels for the week of Sep. 6. At 416.1M barrels, that is 5% above the level last year at this time.
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