Oil Slips After Entering Bull Market on Kurdish Export Threats

Crude in New York fell 0.4 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 Tuesday. Turkey can “close the valves” on oil shipments from Kurdistan, Turkish President Recep Tayyip Erdogan said after the Iraqi region held a vote on independence.
Oil has gained more than 10 percent this month on forecasts for rising crude demand and as members of the Organization of Petroleum Exporting Countries maintain production 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. Brent prices jumped to a two-year high on Monday before retreating Tuesday.

“It’s pure profit taking,” Torbjorn Kjus, oil market analyst at DNB Bank ASA said by phone. “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 $52.03 a barrel on the New York Mercantile Exchange, down 19 cents at 6:39 a.m. local time. Prices surged to $52.22 on Monday, more than 20 percent above their most recent low — a definition of a bull market. Total volume traded was 30 percent above the 100-day average.

Brent for November settlement was 37 cents lower at $58.65 a barrel on the London-based ICE Futures Europe exchange after rising as much as 0.8 percent earlier. Prices added $2.16 to $59.02 on Monday, the highest close since July 2015. The global benchmark traded at a premium of $6.62 to WTI.

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