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Oil stays under pressure as Iran orders sharp rise in crude output

Singapore, Reuters, Jan. 18, 2016 – Oil futures remained under pressure on Tuesday following a slide that has seen prices fall by more than a quarter since the beginning of the year as the full return of Iran to oil markets adds to an already huge supply overhang.
U.S. crude futures CLc1 were trading at $29.14 a barrel by 0249 GMT (2149 ET), down 28 cents from their last settlement.
Front-month Brent crude futures LCOc1 remained below $29 per barrel at $28.84 per barrel after rising slightly in Tuesday’s trade.
Traders said that the diverging movements between Brent and WTI crudes was largely due to technical trading in order to get the two benchmarks back slightly closer together.
The U.S. government has also revoked a 40 year old ban on its crude reserves, resulting in oil flows out of the U.S. crude price zone and into Brent.
Prices fell to their lowest since 2003 on Monday as western sanctions against Iran were lifted. Tehran then ordered a sharp increase in output to take immediate advantage
Oil prices have fallen over 70 percent in the past 18 months as exporters around the world pump out over a million barrels of crude every day in excess of demand. Since January, the prospect of the lifting of the sanctions on Iran accelerated the rout.
Most analysts expect Iran’s full return to oil markets to be relatively slow due to the need to overhaul its infrastructure following years of under-investment, but Iran is also estimated to have stored 12-14 million barrels of crude and 24 million barrels of condensates for immediate sale.

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