Crude falls on UN-Iraq price deal, natural gas reaches new closing high

by The Associated Press

Crude oil futures plunged below $28 a barrel after the United Nations and Iraq hammered out an oil price deal — setting the stage for Iraqi exports to resume.

In other trading, January natural gas futures contract settled at $8.584 per 1,000 cubic feet, up 21.1 cents — a record settlement and almost 30 percent above the previous week’s settlement. Cold weather worries and a projected a squeeze on gas storage supplies by the end of the heating season, helped bring about this week’s price spikes, analysts said.

Crude for January delivery tumbled 91 cents to settle at $28.44 a barrel on the New York Mercantile Exchange Dec. 8, after earlier falling to $27.85. Futures have plummeted $5.27, or 15 percent, since Nov. 30 after Iraq halted its exports in a dispute over oil prices.

The crushing drop to four-month lows in crude came as the U.S. and its allies said they stood ready to tap emergency reserves and producing countries pledged to hike output to make up any supply shortage.

“This is a market that is absolutely refusing to look at anything bullish,” said Peter Beutel, analyst at Cameron Hanover, Inc.

Although Iraq’s resumption of 2.2 million barrels a day in exports would not bring any new oil onto the market — and has been widely anticipated — traders took the price deal as a reason to sell.

“This oil is now being viewed as entirely surplus to anyone’s requirements,” said Tim Evans, analyst at IFR Pegasus.