Oil prices rise on tightening market, traders expect further increases

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SINGAPORE (Reuters) – Oil prices rose on Monday as U.S. markets tightened simply weeks forward of Washington’s plan to impose new sanctions towards Iran, with main traders and banks anticipating prices to rise over $90 per barrel in coming months.

A horizontal drilling rig on a lease owned by Parsley Energy operates within the Permian Basin close to Midland, Texas U.S. August 23, 2018. REUTERS/Nick Oxford

Brent crude futures LCOc1 had been at $79.82 per barrel at 0501 GMT, up by $1.02 cents, or 1.three % from their final shut.

U.S. West Texas Intermediate (WTI) crude futures CLc1 rose by 82 cents, or 1.2 %, to $71.60 a barrel.

Amid a tightening market, U.S. business crude oil inventories C-STK-T-EIA are at their lowest stage since early 2015. And whereas output C-OUT-T-EIA stays across the report of 11 million barrels per day (bpd), current subdued U.S. drilling exercise factors in the direction of a slowdown.

(For a graphic on ‘U.S. oil drilling, manufacturing & storage ranges’ click on tmsnrt.rs/2OKP4nJ)

Commodity retailers Trafigura and Mercuria mentioned on Monday that Brent may rise to $90 per barrel by Christmas and even above $100 in early 2019 as markets tighten as soon as U.S. sanctions towards Iran are carried out from November.

J.P. Morgan expects the sanctions may result in a lack of 1.5 million bpd, whereas Mercuria warned that as a lot as 2 million bpd could possibly be knocked out of the market.

The Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) in addition to high producer Russia are discussing elevating output to counter falling provide from Iran, though no determination has been made public but.

“We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels,” mentioned Edward Bell, commodity analyst at Emirates NBD financial institution.

J.P. Morgan mentioned in its newest market outlook, revealed on Friday, that “a spike to $90 per barrel is likely” for oil prices within the coming months as a result of Iran sanctions.

The financial institution mentioned it expects Brent and WTI to common $85 and $76 per barrel, respectively, over the following six months.

Struggling with excessive feedstock crude prices and report lows for the rupee towards the greenback INR=, Indian refiners are getting ready to chop again crude imports and as a substitute expend business inventories.

(For a graphic on ‘Crude oil value in Indian rupee’ click on tmsnrt.rs/2MZPyVE)

Reporting by Henning Gloystein; enhancing by Richard Pullin

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