Crude oil prices steadied Monday, weighed down by rising supply from OPEC and the U.S., but supported by concerns falling Iranian output will tighten markets once U.S. sanctions begin in November.
Brent crude oil was up 20 cents at $77.84 a barrel by 0745 GMT. U.S. crude was unchanged at $69.80/Bbl, Kallanish Energy reports.
The two benchmarks have risen strongly over the last two weeks with Brent gaining roughly 10% on expectations global supply will tighten later this year.
“The contracts are in a strong uptrend, but one that looks at the moment to be a bit tired,” said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates, Reuters reprted.
Output from the Organization of the Petroleum Exporting Countries rose 220,000 barrels per day (Bpd) in August, to a 2018 high of 32.79 million Bpd (Mmbpd), a Reuters survey found.
Production was boosted by a recovery in Libyan production and as Iraq’s southern exports hit a record.
Investors are looking ahead to later this year when U.S. sanctions are expected to curb exports from Iran, the third biggest producer in OPEC.
Stephen Innes, head of trading for Asia-Pacific at brokerage OANDA, said Brent was “supported by the notion that U.S. sanctions on Iranian crude oil exports will eventually lead to constricted markets,” Reuters reported.
Edward Bell, analyst at Emirates NBD bank in Dubai, agreed: “Iranian production is already showing signs of decline, falling by 150,000 Bpd last month … (as) importers of Iranian barrels will already be moving away from taking shipments.”
Meanwhile, trade disputes between the U. S. and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon.
China’s manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff, a private survey showed Monday.
OANDA’s Innes said it was too early to say whether economic slowdown would put a serious dent in oil prices.
“It isn’t at all clear that such type of economic headwinds will topple oil prices given … the constant barrage of supply outages,” Innes said.
Published: 04-09-2018
