Oil edges up on supply concerns

22 September, 2018, 14:26 | Author: Corey Lynch
  • Technical chart showing the performance of crude oil prices

In May, US President Donald Trump pulled out of an nuclear deal with Iran and announced sanctions against the OPEC member.

With Iran's crude sales falling due to the USA sanctions and countries such as Venezuela struggling to avoid outright economic collapse, it was perhaps inevitable that Mohammad Barkindo, secretary general for the Organization of the Petroleum Exporting Countries (OPEC), would tell Reuters that his cartel will keep working with other oil producers to manage global supplies in the face of demand for crude facing "headwinds". Earlier this month, Saudi shipments into the US reached a four-week average of 1 million barrels a day for the first time since late 2017, according to government data.

The U.S. moves have gotten furious reactions from Iran, especially amid talk of American officials asking Russian Federation and Saudi Arabia to make up the difference. The focus on oil supply has been reflected in the options market this week, where investors have scooped up large amounts of bullish buy, or call, options. “But U.S. pressure will come into play and it's more likely that OPEC producers and allies will decide on a production boost later this week.”.

Brent futures LCOc1 gained 36 cents a barrel to $79.39.

WTI crude for October delivery, which expires Thursday, was at $70.06 on the New York Mercantile Exchange, up 21 cents. Total volume traded was about 45 percent below the 100-day average.

In the last two weeks, Al-Falih has met his counterparts from Russian Federation and the U.S., Alexander Novak and Rick Perry, to discuss the oil market and the impact of U.S. sanctions on Iranian petroleum exports.

Output from Iran has now hit its lowest level since July 2016, according to the International Energy Agency, as top buyers India and China have distance themselves from Tehran.

Saudi Arabia, Russia and other major exporting countries, are scheduled to meet on Sunday in Algiers to review the oil market. Brent rose to a three-year high of $80.50 a barrel in May, prompting Trump to publicly complain about rising fuel prices.

Unilateral U.S. sanctions on oil sales by Iran, OPEC's third-biggest supplier, take effect on November 4.

US crude inventories rose by 1.2 million barrels to 397.1 million in the week to September 14, according to the American Petroleum Institute (API). A Bloomberg survey of analysts forecasts a 2.5-million-barrel decline in nationwide inventories.



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