Oil slips after entering bull market on Kurdish export row

Bloomberg

Oil prices slipped after entering a bull market amid heightened geopolitical tensions in the Middle East, while Trafigura Group and Citigroup Inc. both warned of a looming supply squeeze.
Crude in New York fell 0.7 percent as traders cashed in after yesterday’s 3.1 percent surge. The oil market is nearing the end of the “lower-for-longer” era, with a shortage likely in 2019, trading house Trafigura said on Tuesday. In Turkey, President Recep Tayyip Erdogan threatened to “ close the valves” on oil shipments from Kurdistan after the Iraqi region held a vote on independence.
Oil has gained almost 10 percent this month on forecasts for rising consumption and as members of the Organization of Petroleum Exporting Countries maintain output cuts to drain a global glut. The market rebalancing has helped flip the futures curve into backwardation, a structure where immediate deliveries of oil are more expensive than longer-dated ones, signaling strong demand.
“It’s pure profit-taking,” Torbjorn Kjus, an oil-market analyst at DNB Bank ASA in Oslo, said.
“It’s very natural. The most natural thing would be if we lose some more during the day, but so far it’s holding up almost unexpectedly well after that very large rally yesterday.”
West Texas Intermediate for November delivery was at $51.86 a barrel on the New York Mercantile Exchange, down 36 cents, at 8:46 am local time. Total volume traded was 31 percent above the 100-day average. Brent for November settlement dropped 75 cents to $58.27 a barrel on the London-based ICE Futures Europe exchange after rising as much as 0.8 percent earlier. The global benchmark traded at a premium of $6.41 to WTI on Tuesday.
The effect of OPEC’s curbs could be amplified if the vote in the Iraqi enclave of Kurdistan provokes a political crisis, threatening more than 500,000 barrels a day of shipments to global markets.
Ankara opposes an independent Kurdish state and has economic leverage because the export pipeline runs through Turkey to the Mediterranean.

Crude lifts
markets amid global concerns
Reuters

Rising oil prices helped Middle East indexes eke out modest gains on Tuesday, though shares more exposed to foreign funds followed global markets lower, weighed down by a list of worries including North Korea.
Brent oil surged 3.8 percent overnight to settle at $59.02 a barrel after major producers said the global market was on its way to rebalancing, and crude held near that level on Tuesday.
Riyadh’s index rose 0.2 percent as most petrochemical shares advanced, including bellwether Saudi Basic Industries which added 1.4 percent.
The main stock index had dropped 1.4 percent on Monday amid rumours that index compiler FTSE might not upgrade Riyadh to emerging-market status on September 29.
Although no fresh news or reports were released overnight to quash the speculation, investors bought shares that had been hit including lender Samba Financial Group; it rebounded 0.8 percent on Tuesday. Qatar’s stock index climbed 1.4 percent, its largest single-day rise since July 13 as local and regional funds were again net buyers.
Fund managers from the six-nation Gulf Cooperation Council, excluding Qatar, dumped Qatari equities after four Arab states cut ties with Doha in June. It was not clear whether some GCC investors were now buying because they hoped for a resolution of the dispute.