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Oil is poised for a second monthly advance. propelled by the prospect of a disruption in Iranian supplies and as OPEC closes in on its target of wiping out a global glut.
Futures in New York are up 3.9 per cent this month. even after a near 1 per cent drop on Monday following data that showed an increase in US drilling activity.
A potential withdrawal in May by US President Donald Trump from a 2015 nuclear deal between world powers and Iran would reimpose sanctions on the producer and curb its exports.
Meanwhile. Opec is trimming output even after concluding it has cleared 97 per cent of the surplus that has weighed on prices.
Oil has surged to levels last seen in 2014 as everything from the conflict in Syria. to tensions between Saudi Arabia and Iran-backed rebels in Yemen. stoked concerns over supply disruptions.
French President Emmanuel Macron`s prediction that the US will pull out of the nuclear deal has boosted speculation over reduced shipments from Iran.
Still. expanding American drilling activity continues to weigh on prices.
`We`ll see oil fluctuating as uncertainties will persist over whether Trump will withdraw from the Iran nuclear agreement.` Vincent Hwang. a commodities analyst at NH Investment &. Securities. said by phone in Seoul.
`Prices have rallied as OPEC and its allies including Russia have eroded global inventories and as geopolitical risks surrounding the US and the Middle East have increased this month.`
West Texas Intermediate crude for June delivery traded at US$67.48 a barrel on the New York Mercantile Exchange. down 62 cents. at 8.23 am in London. The contract fell 0.4 per cent last week. Total volume traded was about 17 per cent below the 100-day average.
Brent crude for June settlement. which expires Monday. dropped 74 cents to US$73.90 a barrel on the London-based ICE Futures Europe exchange. Prices are up 5.2 per cent for the month. The global benchmark crude traded at a US$6.43 premium to June WTI. The more-active July contract traded at US$73.16.
While US Defense Secretary Jim Mattis said last week that there`s been no decision on the nuclear deal. the nervousness around a potential breakdown in the accord is also spilling over into the physical oil market.
Traders are unwilling to sign contracts for Iranian crude and refined products that would be valid after May 12. the deadline for Mr Trump to decide whether to reimpose sanctions. according to recent interviews with six companies that buy and sell oil in the Middle East.
In the US. working oil rigs rose by five last week to 825. the highest level since March 2015. according to data from Baker Hughes. The rig fleet has expanded throughout the entire month of April. adding a total of 28.
Investors are assessing if surging US production. which has topped 10 million barrels a day every week since early February. will undermine efforts by OPEC to balance the market via output cuts.
In other oil-market news:
Hedge funds reduced their WTI net-long position – the difference between bets on a price increase and wagers on a drop – by 2.1 per cent to 433.118 futures and options during the week ended April 24. according to the US Commodity Futures Trading Commission.
Saudi Aramco. the world`s biggest crude exporter. appointed new board members with experience in international oil and petrochemical businesses as it plans a possible overseas share sale in what could be a record initial public offering.
Angola. once Africa`s biggest crude producer. is suffering sharp declines at under-invested offshore fields. with output dropping almost three times as much as the nation pledged in an accord with fellow OPEC members.
