Oil fell, erasing an earlier gain, as a global glut outweighed an increase in tension between Saudi Arabia and Iran.
The
Saudi government cut ties with Iran following an attack on its embassy
in Tehran by demonstrators protesting the execution of a prominent
Shiite cleric. Prices last week capped the biggest two-year loss on
record amid speculation a global glut will be prolonged as U.S. crude
stockpiles expanded and the Organization of Petroleum Exporting
Countries abandoned output limits.
The
Middle East accounted for about 30 percent of global oil output in
2014, according to the U.S. Energy Information Administration. Iran and
Saudi Arabia sit on either side of the Persian Gulf, the site of the
world’s biggest concentration of oil tankers.
West
Texas Intermediate for February delivery fell 26 cents, or 0.7 percent,
to $36.78 a barrel at 1:52 p.m. on the New York Mercantile Exchange.
Brent for February settlement slipped 9 cents to $37.19 a barrel on the
London-based ICE Futures Europe exchange. The European benchmark crude
was at a premium of 41 cents to WTI.
Crude
inventories at Cushing, Oklahoma, the delivery point for WTI futures,
rose to 63 million barrels in the week ended Dec. 25, a record high,
according to the Energy Information Administration. Domestic production
climbed for a third week to 9.2 million barrels a day.
Source: Bloomberg
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