Image credit: A/S Global Risk Management

---

Oil started out this week by retracing slightly upwards after a bearish last week

The U.S. sanctions against Iran have officially kicked in, but they turned out to have quite the opposite effect of bullish during the last week.

Even though the Iranian exports and production have decreased quite remarkably, the October fundamental statistics show that global demand has cooled down a bit. Additionally, Saudi Arabia, Russia and especially Iraq are trying to gain market share from Iran as they have pledged to increase production and exports. Iraq increased exports in October hitting almost record highs. The Russian production is at all-time high, but Saudi Arabia is allegedly having a hard time increasing output as the huge oil producer is still producing less than the historical high. Both Russia and Saudi Arabia are yet to prove increased export capacity.

However, what most likely gave the downwards trend in prices was the U.S. announcing waivers for key importers of Iranian crude. Waivers were granted for the following 8 countries: China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. The waivers are not meant to be permanent as the U.S. officially aims at Iran exporting 0 barrels, which is why these waivers are designed to last up to 180 days.

The U.S. refineries are still running on low steam in terms of utilization of total capacity which likely is weighing on crude demand.

Crude output in Venezuela fell further during October and is now 750 kbpd short of October 2017 output.

Turning to economic data front, overnight, Japanese Household Spending came out lower than expected. Later today Euro Zone Services PMI and U.S. job report is published.