Crude oil futures up Rs 31 on positive Asian cues

Violet Tucker
October 19, 2017

OPEC and 10 producers outside the cartel, including Russian Federation, first agreed late a year ago to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices.

"We have kept buying USA crude since we made our first purchase of it, nearly 2 million barrels every month because we found the economics of USA crude are good", said Kim Woo-kyung, a spokeswoman at SK Innovation, which owns SK Energy.

With supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) tightening the market, analysts have been raising their oil price forecasts.

Despite prices dipping after reports of Iraqi forces taking control of previously Kurdish-held oil fields, Brent crude futures were still at $57.70 at 0646 GMT, 2.7 percent higher than last Friday's settlement and nearly a third above mid-year levels.

The global benchmark hits its highest in three weeks earlier in the session at $58.54 a barrel because of ongoing tensions around oil-rich Iraq and Iran, which raised risk premiums. Iraq, the second-largest producer in the Opec, pumps most of its 4.47 million barrels a day from fields in the south and ships it from the Persian Gulf port of Basra. WTI crude oil continues to trade higher on Tuesday morning, gained 0.50% to trade at $52.12.

After the news of the Iraqi forces' engagement in Kirkuk with Kurdish forces on October 16, 2017, the Brent-WTI spread expanded $0.28.

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Crude oil prices edged higher on Monday as the clash between Iraqi and Kurdish forces began in Kirkuk lifting up worries over supply interruption.

“Kirkuk, the main city in the region, produces around 10 percent of Iraq's total oil output and any (further) disruption could therefore have a significant impact on supply, ” said William O‘Loughlin, investment analyst at Rivkin Securities. U.S. President Donald Trump declined to certify Iran's submission over a nuclear deal, leaving Congress a couple of months to decide further action against Tehran.

Analysts said traders built fresh positions following crude oil prices jumping in Asian trade as data showed a drop in USA stockpiles.

Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was up 0.82%, at $1.63 a gallon.

During the previous round of sanctions against Iran, about 1 million bpd of oil was cut from global markets. "Collectively, OPEC countries lost more than $1 trillion".

"We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel respectively".

Other reports by Guamnewswatch

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