After an $8 per barrel decline last Friday, oil prices rebounded a few dollars on Monday as profit-taking set in. Much of Monday’s gain, however,  was lost on Tuesday as news that a settlement between Iraq and the Kurds could soon bring an additional 300,000 b/d to market.  On Wednesday Brent continued to fall, closing just below $70 a barrel, while New York futures climbed to a $67.38 close on news that US crude stockpiles underwent an unexpected 3.7 million barrel decline last week.
 
The Wall Street Journal reports that the Saudis will not entertain production cuts even if oil prices fall further and that Riyadh expects that global oil will settle around $60 a barrel which it says is sustainable for the Gulf Arab states.  The rest of the world is in the midst of either depression or jubilation over the steep and rapid fall in oil prices.  At least eight OPEC members are being badly hurt by the price decline and Russia is on the verge of a recession.  Major oil importers, including the US, Japan and parts of Europe, are already feeling significant economic benefits from the markedly lower oil prices.
 
The weekly US stocks report reflected some unusual developments. While US crude inventories fell by 3.7 million barrels as refining increased by 400,000 b/d over the previous week and imports fell, US gasoline stocks rose by 2.1 million barrels and distillate stocks were up by 3 million barrels.  Analysts say that oil product distributors cut back on buying last week in anticipation that lower oil prices would result from the OPEC meeting. The overall result was that oil product inventories mostly balanced out the drop in crude stocks.  For what it is worth, a station in Oklahoma became the first in the US to sell gasoline below $2 a gallon this week.
 
US natural gas prices continued to plunge this week as forecasts of more warm weather coupled with increasing supplies weighed on the markets. Natural gas futures which had been trading at close to $4.70 per million BTUs just last week closed Wednesday at $3.79.
 
The deal between the Kurds and Baghdad which was announced this week will not only let the Kurds sell their own 250,000 b/d  without interference, but will let Baghdad export some 300,000 b/d from the oilfields around Kirkuk to Turkey via the new pipelines through Kurdistan. In addition to settling who gets how much of the oil revenue, Baghdad will begin paying the Kurds for the costs of fighting ISIL.
 
The major news out of Iraq this week was the US announcement that Iran has begun bombing ISIL targets along the Iraq/Iran border.  Everybody is denying that Iran is coordinating the strikes with the US. The Middle Eastern situation becomes more bizarre with each passing month.
 
Every day brings news of new economic woes for Moscow. The joke of the week in Russia is that next year President Putin will be 63 years old; oil will be selling for $63 a barrel; and the ruble will be trading at 63 to the dollar.  All this is not very far from the truth.