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Oil drops to 7-month low as fears of global shortage fade

BloombergNEW YORK (Bloomberg) — Oil fell to a seven-month low as concerns about a worldwide supply squeeze eased.

Futures fell 1.4 percent in New York on Tuesday. American crude stockpiles have been expanding for almost two straight months. Meanwhile, U.S. government waivers will allow some of Iran’s biggest customers to buy crude from OPEC’s No. 3 producer for another six months, damping shortage fears.

“Oil prices don’t have any real reason to rally significantly,” said Phil Streible, senior market strategist at R.J. O’Brien & Associates LLC in Chicago.

Crude has tumbled almost 20 percent since touching a four-year high last month as bearish supply signals around the globe crowded out concerns about disrupted exports from Iran and Venezuela. The waivers announced this week by U.S. Secretary of State Mike Pompeo apply to China, India and six other nations.

“The U.S. has for now given a lifeline to Iran,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “The end result of the sanctions is softer than expected. The final outcome of the sanctions also confirms the political fear of high gasoline prices.”

West Texas Intermediate crude for December delivery declined 1.4 percent to settle at $62.21 a barrel on the New York Mercantile Exchange, the lowest close since April 6.

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