Though oil prices fell slightly in early trading at the close of last week, there are indications of an upward trend this week as the market looks forward to a second week of gains in a row with supply disruptions around the globe making the oil market look increasingly tight.
Therefore, the expected string of gains may end the two months losses and a significant dip in sentiment. Nonetheless, the oil market is now two months away from seeing substantial supply losses from Iran due to sanctions just as the declines are already underway, thus raising concerns about market tightness.
At the close of work month-end, the U.S., Mexico and Canada were nearing a trilateral deal on NAFTA ahead of last weekend’s self-imposed deadline. The three countries are now eager to strike a deal so as to have enough time to pass the treaty before the change of administrations in Mexico as well as the potential loss of a Republican majority in the U.S. Congress after November’s midterm
elections.
The negotiations are coming after the U.S. and Mexico announced a preliminary bilateral deal earlier last week. While details have not been disclosed, reports suggest that the revisions to NAFTA preserve the protections offered to the investments of oil and gas companies under the current treaty. But the investor-state dispute mechanism has been watered down, though with an exemption for oil and gas as the main focus of the overhaul is on agriculture and
automobiles.
