NEW YORK (Reuters) – Oil futures fell about 1% among global oversupply worries, but losses were eased as investors took into account potential sanctions all over the world. 39; Iran from the European Union, a possible production cut from Opec and a slight increase in the extraction of US crude oil stocks.
A rainbow is seen on a pumpjack during sunset outside Scheibenhard, near Strasbourg, France, on 6 October 2017. REUTERS / Christian Hartmann
Brent crude fell 70 cents a barrel to $ 66.66 at 11:37 am EST (1637 GMT), after recovering from a low session to $ 65.27. US crude futures traded at 15 cents less at $ 56.31 a barrel.
EU foreign ministers approved a decision by the French government to sanction Iranian citizens accused of a conspiracy in France, potentially allowing the measures to take effect on the whole bloc, three diplomats said.
Potential sanctions by E.U. it would come when the United States granted derogations to some of the Iranian oil customers, changing the expected impact of global supply policy.
The Organization of Oil Exporting Countries, led by Saudi Arabia, is pushing for the group and its partners to reduce the production of 1 million to 1.4 million barrels per day to prevent the accumulation of unused fuel.
Russian Energy Minister Alexander Novak said that Russia, which is not a member of OPEC, has planned to sign a partnership agreement with the group, and that details will be discussed at the meeting of the OPEC of December 6 in Vienna.
"In order for a cut to be successful in supporting the market, they will have to present a fractured front and the chances of this happening are getting less frequent as they approached December 6," said Bob Yawger, director of futures Energy at Mizuho in New York.
While a broad cut would support the future of crude oil, clear signals are needed from producers to raise prices, in particular, said Yawger. "We have no certainty except that the market is overcrowded in the United States and everyone else is trying to tackle it."
Stocks of crude oil in the United States have grown for eight consecutive weeks, and last week's data showed that inventories swelled more in more than a year, weighing on the market.
Traders said futures reduced losses on bullish stock data, while they said Genscape, an energy information provider, reported that crude inventories fell in the week ending Friday.
Brent is almost 25 percent lower than the peak at the beginning of October 2018 of $ 86.74, as evidence of the slowdown in demand materialized and production from the United States, Russia and Saudi Arabia reached record highs.
"Oil prices have risen (last week) on OPEC hope and partners, they will act to reverse the bearish sentiment, but from a technical set-up, the bear mode remains intact," said OANDA strategist Stephen Innes.
A trade dispute between the United States and China is one of the reasons investors are far more concerned about the prospects for oil demand growth next year.
GRAPH: US oil drilling, production and storage – tmsnrt.rs/2PBfE7z
Fund managers reduce their bullish exposure to crude futures and options from around mid-2017 this month.
Weekly trading data show that money managers hold a combined net long position of around 364 million barrels of futures and options on Brent crude, down from more than 800 million barrels two months ago.
"The main trend remains bearish, as investors no longer believe in a risk of crude oil supply restriction," said ActivTrades chief analyst, Carlo Alberto De Casa.
Additional reports by Henning Gloystein in SINGAPORE and Amanda Cooper in LONDON; Editing by Marguerita Choy and Mark Potter