Concern that oil may reach $100 a barrel
Opec again urged by US President Trump to raise production level
OIL TRADED near a four-year high as the US urged Opec to raise production amid growing alarm that US sanctions against Iran will squeeze global markets.
West Texas Intermediate (WTI) futures have climbed 4 percent this week, and remained above $76 (R1 096.77) a barrel yesterday. The US State Department said it had encouraged Opec “to utilise their spare capacity to ensure world supply meets demand,” just hours after Saudi Arabia – Opec’s biggest member – said it was pumping near-record levels. Yet traders remain unconvinced there’s enough supply to fill deepening losses in Iran.
Oil has rallied about 16 percent since mid-August on fears of a global supply crunch, prompting US President Donald Trump to repeatedly demand that Opec take action to lower prices.
While Saudi Arabia and Russia could pump more, traders continue to speculate whether Opec and allied producers can offset a supply loss in Iran and declining production in Venezuela.
The “market reaction shows spare capacity is moving to a precariously low point,” Jason Gammel, an analyst at Jefferies LLC, said in a television interview.
“One-hundred dollars is a realistic possibility.”
WTI for November delivery slipped 23 cents to $76.18 a barrel on the New York Mercantile Exchange at 10.40am in London.
The Relative Strength Index for WTI topped 70 points earlier this week for the first time since late June, signalling to some that the rally may be overdone. Brent for December settlement fell 0.4 percent to $85.97 a barrel on the London-based ICE Futures Europe exchange.
Prices rose 1.8 percent to $86.29 on Wednesday, the highest level since October 2014. The global benchmark crude traded at a $9.96 premium to WTI for the same month.
With a looming November deadline to comply with renewed US sanctions, Iran’s customers are increasingly being scared away.
Iranian condensate cargoes to stateowned Emirates National Oil Company dropped by half in September, while customs officials in the United Arab Emirates are said to require oil tankers docking at Fujairah’s fuel terminal to provide a certificate attesting to the origin of their cargoes. | Bloomberg