Oil prices continued to decline overnight based on concerns that Iran could soon be able to ship more crude into an already oversaturated market.
As reported by CNBC, a deal is expected to be reached regarding Tehran's nuclear program that could end Western sanctions, allowing the OPEC member to flood the market with more crude oil. It has also stated in the past that it would consider increasing its exports by one million barrels a day if such penalties were removed.
The possibility of a deal being struck played on investor sentiment overnight with West Texas Intermediate (WTI) crude slipping 1.6% to US$48.08 a barrel while Brent crude, the global benchmark, fell approximately 0.5% to US$56.12 a barrel. Both have more than halved in value since June 2014 due to the market's oversupply situation.
Despite the overnight fall, Australia's oil and gas stocks are mostly trading higher today. BHP Billiton Limited (ASX: BHP), Liquefied Natural Gas Ltd (ASX: LNG) and Woodside Petroleum Limited (ASX: WPL) are all performing particularly well, with their shares up 2.6%, 3% and 2.3% respectively, while Santos Ltd (ASX: STO) and Oil Search Limited (ASX: OSH) have also risen 1.3% and 1.7% each.
Although they're bouncing today, investors should remain wary of the sector. Further falls in commodity prices are expected over the coming months which could certainly inflict more pain on each of the companies mentioned above.
