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London - Oil fell along with other commodities after the US Treasury softened its stance on sanctions that crippled a giant Russian aluminum producer and disrupted the global market for the metal.
Futures in New York dropped 1.5%. The US said it will provide sanctions relief to United Co Rusal if Oleg Deripaska relinquishes control, while also extending the deadline for companies to wind down dealings with the company.
While the restrictions on Rusal didn’t directly affect oil, crude traders are closely watching President Donald Trump’s attitude to punitive trade measures as he considers whether to renew sanctions waivers on OPEC member Iran next month.
“It softens the potential geopolitical risk premium that has built up in recent weeks,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “If the US can soften its stance on Russia, I suppose they could do it on Iran as well.”
Crude rallied this month to levels not seen since 2014 as geopolitical tensions ramp up in the energy-rich Middle East, and between the US and Russia.
On Friday, Trump on Friday slammed the Organisation of Petroleum Exporting Countries, accusing it off artificially boosting prices. While the group and its allies wiped out 97% of the targeted surplus that has weighed on prices for three years, their production cuts continue.
West Texas Intermediate crude for June delivery fell 1.5% to $67.37 a barrel on New York Mercantile Exchange at 8:34 local time. The May contract added 0.1% to $68.38 on Friday. Total volume traded was about 15% above the 100-day average.
Brent crude for June delivery dropped 74 cents to $73.32 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 2% last week to settle at $74.06. The global benchmark crude traded at a $5.89 premium to June WTI.
Yuan-denominated futures for September delivery added 0.8% to 436.3 yuan a barrel on the Shanghai International Energy Exchange, after climbing 2.3% last week.
Oil-market news:
• Oil’s surge to the highest level in more than three years will in fact spur fuel demand as swelling reserves of Middle East petrodollars are reinvested overseas and stimulate the global economy, Goldman’s head of commodities research said.
• In the US, explorers have added 23 rigs so far this month, bringing the total working rigs to 820 last week, Baker Hughes data showed.
• The nation’s crude production has more than doubled from the lows of a decade ago, topping 10 million barrels a day each week since early February.
• An attack on an oil pipeline supplying Libya’s biggest export terminal has reduced the North African country’s production by at least 80 000 barrels a day and will take several days to repair, the National Oil said on Sunday.
• Money mangers have increased their bullish WTI crude bets by 24 758 net-long positions to 442 408, according to the US Commodity Futures Trading Commission.
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