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Oil trades near $69 as signs of higher supply offset Iran fears

Sep 17 2018 09:32
Heesu Lee, Bloomberg

Oil traded near $69 a barrel on signs of increased drilling by American producers and investor optimism that Saudi Arabia and Russia will fill in potential supply losses from Iran.

Futures were little changed in New York, after gaining 0.6% on Friday. Shale explorers added last week the most oil rigs in a month as a pipeline bottleneck in the busy US Permian Basin is encouraging drilling in other areas.

Meanwhile, Russian Energy Minister Alexander Novak and his Saudi Arabian counterpart Khalid al-Falih met in Moscow Saturday to confirm their willingness to stabilise prices and react to any changes in the market.

Crude has mostly stayed below $70 a barrel since mid-July as a trade dispute between the US and China threaten global economic growth. Speculation has also been swirling over whether a potential supply gap can be filled as American sanctions curb Iran’s oil exports.

Traders are looking for more clarity as the Organisation of Petroleum Exporting Countries and its allies meet in Algiers later this week to discuss their output.

“The US-China trade tension restricts oil from rising further, while optimism over Saudi and Russia making up for Iran’s losses is keeping prices from falling lower,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities, said by phone from Seoul.

“It’s important for OPEC and its allies to make sure prices don’t drop excessively and the market’s expecting the upcoming meeting to be a reassurance.”

West Texas Intermediate for October delivery was at $69.04 a barrel on the New York Mercantile Exchange, up 5 cents, at 08:55. The contract climbed $1.24 to $68.99 last week. Total volume traded was about 47% below the 100-day average.

Brent for November settlement traded at $78.17 a barrel on the ICE Futures Europe exchange, up 8c. The contract rose $1.26 to $78.09 last week. The global benchmark crude traded at a $9.34 premium to WTI for the same month.

Some other key oil-market figures, news and events:

• Working oil rigs in the US rose by 7 to 867 last week, the biggest increase since the week ended August 10, according to data released on Friday by oilfield-services provider Baker Hughes. Though the number of active rigs declined in the Permian, two were added in the Denver-Julesburg Niobrara play in Colorado and another was activated in the Bakken of North Dakota.

• While money managers pile up on bets that Brent futures will rise as supplies from Iran shrink, even Hurricane Florence wasn’t enough to get investors excited in the US Companies, regulators and environmental groups are waiting for record floods to recede, so they can make a comprehensive assessment of damage from Hurricane Florence.

Shanghai crude futures for December delivery was up 0.3% at 527.5 yuan a barrel, after adding 1.7% last week.

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commodities  |  markets  |  oil
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