Oil edges up on supply concerns

Galtero Lara
Setiembre 19, 2018

Oil prices were little changed on Monday as the market weighed deepening trade tension between the US and China that is expected to dent global crude demand and potential supply tightening due to Iran sanctions.

Brent crude futures were up $1.03 a barrel to $79.09 a barrel at 0923 GMT, after hitting $79.32.

US West Texas Intermediate (WTI) crude was down 15 cents, or 0.22 percent, at $68.76 per barrel.

"It may also suggest they don't have the ability to make up for the losses that are already stemming from impending USA sanctions on Iran".

Oil prices firmed on Tuesday after Saudi Arabia indicated it was comfortable with a higher price range ahead of a meeting between major producing countries in Algeria.

U.S. Energy Secretary Rick Perry told Reuters at the weekend that he did not expect any price spikes and that Saudi Arabia, the U.S and Russian Federation could between them raise global output in the next 18 months.

OPEC is meeting soon to discuss output limits, which will give Saudi Arabia a chance to blame the United States for rising prices.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, including the world's biggest producer Russian Federation, are meeting on September 23 in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian oil supply.

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He did not specify how crude producers would compensate for declining exports from Iran, with new U.S. sanctions due to hit the Islamic republic's oil industry on November 4.

The producer group said in June that it would agree to some supply increases starting in July, though the specific targets were not announced at the time.

Crude inventories fell 2.1 million barrels last week to 394.1 million barrels, the lowest level since February 2015, EIA data showed.

U.S. crude stocks increased by 1.2 million barrels according to the American Petroleum Institute (API), sharply reversing the market forecast of -2.7 million barrels, raising prospects for a widening premium in the Brent versus WTI with crude runs worsening in Europe and Asia.

Beijing on Tuesday quickly added $60 billion of US products to its import tariff list in retaliation for President Donald Trump's planned levies on $200 billion worth of Chinese goods.

US stock indexes broadly fell yesterday, weighing on oil futures, on expectations that Trump would go ahead with the new tariffs and that Beijing would retaliate.

"Traders are ignoring today's API data. while focusing on news from the Middle East", Stephen Innes, head of Trading for APAC at OANDA wrote in a note.

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