Oil extends slide as Iran pledges quick output boost amid glut

SINGAPORE: Oil extended its biggest monthly slump in nearly seven years as Iran vowed to boost production almost immediately after sanctions are lifted.


Futures fell as much as 1.6 percent in New York after capping a 21 percent drop in July.

Iran can raise output by 500,000 barrels a day within a week after the end of sanctions and by 1 million a day a month after that, the state-run Islamic Republic News Agency reported.

An official Chinese factory gauge declined to a five-month low, signaling more government efforts are needed to spark a recovery.

Crude slid into a bear market last month as raw materials fell amid expanding supplies and concern demand in China may falter with slower economic growth.

Iran’s nuclear deal with world powers has fueled speculation about when and by how much it will lift output.

Sanctions against the Persian Gulf nation should be lifted by late November, the oil ministry’s news agency reported.

“If Iran is able to increase production to the level it estimates, oil prices will see further declines as that will only add to the existing glut,” Hong Sung Ki, a commodity analyst at Samsung Futures Inc., said by phone from Seoul.

“Weaker economic data in China and the U.S. will decrease demand.”

West Texas Intermediate for September delivery lost as much as 77 cents to $46.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $46.80 at 11:01 a.m. Singapore time.

It fell $1.40 to $47.12 on Friday, the lowest close since March 20. Total volume was about 4 percent above the 100-day average for the time of day. Prices are down 12 percent this year.

Brent for September settlement dropped as much as 71 cents, or 1.4 percent, to $51.50 a barrel on the London-based ICE Futures Europe exchange.

Prices have slid more than 20 percent from this year’s high on May 6, meeting a common definition of a bear market. The European benchmark crude traded at a premium of $5 to WTI.

Iran plans to double exports, State news agency reported, citing Oil Minister Bijan Namdar Zanganeh in an interview with state TV.

The Islamic Republic produced an average of 2.85 million barrels a day last month compared with 3.6 million at the end of 2011, according to estimates compiled by Bloomberg.

China’s official Purchasing Managers’ Index was 50 in July, down from 50.2 in the previous month. Numbers above 50 indicate expansion.

The data echoes a private PMI that weakened last month, indicating the effects of easier monetary policy have yet to kick in.

In the U.S., consumer confidence retreated in July as Americans’ expectations deteriorated to an eight-month low, the University of Michigan said on July 31.

Hedge funds reduced bullish bets to the lowest level in five years as the world’s biggest oil companies including BP Plc said prices will be lower for longer.

The net-long position in WTI contracted 7 percent in the week ended July 28, U.S. Commodity Futures Trading Commission data show.