Oil prices rise on tighter supply outlook

By Andres Guerra Luz NEW YORK (Reuters) - Oil prices rose on Monday, as traders kept the focus on supply disruptions and the possible hit to crude output from U.S. sanctions on Iran. October Brent crude futures were up 76 cents at $75.52 a barrel by 11:57 a.m.

Reuters July 31, 2018 00:05:45 IST
Oil prices rise on tighter supply outlook

Oil prices rise on tighter supply outlook

By Andres Guerra Luz

NEW YORK (Reuters) - Oil prices rose on Monday, as traders kept the focus on supply disruptions and the possible hit to crude output from U.S. sanctions on Iran.

October Brent crude futures were up 76 cents at $75.52 a barrel by 11:57 a.m. EDT (1557 GMT). The September contract expires on Tuesday. U.S. crude futures rose $1.51 at $70.21 a barrel.

The market held gains even after a Reuters survey showed OPEC increased production in July. The Organization of the Petroleum Exporting Countries hiked production 70,000 bpd to 32.64 million bpd, a 2018 high. Further gains could offset production outages and pressure prices.

Prices remain buoyed by a tight supply outlook, with global inventories down from record highs in 2017 and U.S. inventories at a three-year low, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

"If you take a step back and look at where global inventories and U.S. inventories are, you're seeing a tighter picture than where we were a year ago," McGillian said. "Overall, I think the market is in the process of stabilizing."

Saudi Arabia last week said it was suspending oil shipments through the Red Sea's Bab al-Mandeb strait, one of the world's most important tanker routes, after Yemen's Iran-aligned Houthis attacked two ships in the waterway.

"The ongoing concerns about the lack of supply coming out of the Bab al-Mandeb strait on top of continued disruption in Venezuela seems to be giving the market momentum, not to mention the potential loss of Iranian supply," said Phil Flynn, analyst at Price Futures Group in Chicago.

Traders said prices pulled back after information supplier Genscape reported that inventories at Cushing, Oklahoma, the delivery hub for U.S. crude, rose almost 200,000 barrels, or nearly 1 percent, from Tuesday to Friday last week.

Oil prices have rebounded from recent lows over the last two weeks, as looming sanctions on Iran have already started to curtail exports from that country.

"It is the impact of the U.S. sanctions on Iran that will decide the next $15 a barrel," PVM Oil Associates Tamas Varga said in a note.

"The best-case scenario is that the U.S. provides meaningful sanction waivers in the run-up to the mid-term elections and Iran can get away with a loss of around 500-700,000 barrels per day of exports. In case, however, President Trump plays hardball and puts its allies and foes under maximum pressure the loss of barrels could amount to 2 million barrels per day."

(Additional reporting by Amanda Cooper in London; Aaron Sheldrick in TOKYO; Editing by Kirsten Donovan and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.