The price of West Texas Intermediate (WTI) crude oil dropped over $2.00, or 3.8%, to $51.90 in New York trade as Iraqi exports posted a record high for the month of December.
This is the biggest daily drop in over five weeks as investors are now concerned about Iraqi compliance with the OPEC production cuts agreed to on November 30th in Vienna.
Crude Oil posted its biggest gain since 2009 last year, largely based on the agreement from OPEC and 11 other countries to curb output starting January 1st.
Non-compliance has been a recurring theme in previous OPEC agreements, and the Iraqi export data may be the first sign of a crack in the most recent production accord.
The close below $52.00 in the front month WTI contract is the first trade below the 30-day moving average in over a month and suggests further downside extension below $51.50.
On the ASX, Oil Search (OSH) reached a 2 month high of $7.45 yesterday but will likely trade lower today. Technically, we look for initial support at $7.00 with the Pre-OPEC key support level at $6.40.