Oil fell to a six-month low in London as Iran vowed to boost production immediately after sanctions are lifted and manufacturing in China slowed.
Brent futures declined as much as 2.6 percent, extending an 18 percent drop in July that was the biggest in seven months. Iran can raise output by 500,000 barrels a day within a week of sanctions ending, the state-run Islamic Republic News Agency reported.
A Chinese private factory gauge released on Monday fell to a two-year low in July, while an official index on Saturday slipped to the lowest in five months.
Crude slid into a bear market last month, joining a broader slide in raw materials amid expanding supplies and signs of slower growth in China. Iran’s nuclear deal with world powers 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 Iranian Oil Ministry’s Shana news agency reported.
“The Iran deal is not 100 percent done but it’s definitely much, much closer,” Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB, said by phone. “We’re running a 2 million-barrels-a-day surplus this year — it’s basically crushing the oil price, and something has to give.”
Brent for September settlement dropped as much as $1.36 to $50.85 a barrel and traded at $51.07 at 11:35 am on the London-based ICE Futures Europe exchange. Prices are more than 20 percent below this year’s high on May 6, meeting a common definition of a bear market. The European benchmark crude traded at a premium of $4.68 to West Texas Intermediate.
WTI for September delivery lost as much as 86 cents to $46.26 a barrel in electronic trading on the New York Mercantile Exchange. That’s the lowest price since March 23. Total volume was about 13 percent above the 100-day average for the time of day. Prices are down 13 percent this year.
Hedge funds reduced bullish bets on the US benchmark 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.
Iran plans to double exports, IRNA 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.
A China factory index for July released Monday by Caixin Media and Markit Economics came in at 47.8, a decline from 49.4 in June, indicating the effects of easier monetary policy have yet to kick in. The country’s official Purchasing Managers’ Index was 50 in July, down from 50.2 in the previous month. Numbers above 50 indicate expansion.
