Brent at 4-year high as Opec rebuffs US call

MERCURIA ENERGY AND TRAFIGURA GROUP EXPECT RETURN OF $100 A BARREL

Brent crude extended gains from the highest level in almost four years as a chorus of banks and trading houses argued prices may spike after the Organisation of Petroleum Exporting Countries (Opec) rebuffed US President Donald Trump’s call to rapidly boost production.

Futures rose as much as 1.2 per cent in London after a 3.1 per cent advance Monday. Mercuria Energy Group Ltd and Trafigura Group expect the return of $100 (Dh367) a barrel, last seen in 2014, due to a potential loss in Iranian supply. Bank of America Corp and JPMorgan Chase & Co also predicted higher prices, while options traders appear to have joined the speculation.

Oil rallied after Opec and its partners stopped short of pledging immediate production increases even though looming US sanctions on Iran have started removing barrels from the market. Still, a trade stand-off between America and China could put energy demand at risk in the longer term, with energy major BP warning that the concern hasn’t been priced into crude yet.

Only way is up

“The only way is up for the energy complex, with Brent briefly scrambling past $82 a barrel to touch a fresh fouryear high,” PVM Oil Associates analyst Stephen Brennock wrote in a report. “Market bulls are still riding high after Opec’s decision not to address the shortfall in Iranian oil supplies. A supply crunch now potentially looms on the horizon.”

Brent for November settlement rose as much as $1 to $82.20 a barrel on the ICE Futures Europe exchange and traded at $81.82 as of 8.45am New York time. The contract climbed $2.40 to $81.20 a barrel on Monday, the highest since November 2014. The global benchmark traded at a $9.41 premium to West Texas Intermediate.

US stocks struggled for direction after two days of declines, as surging oil prices lifted energy producers while chipmakers dragged tech shares lower. Treasuries fell as the Federal Reserve started its two-day policy meeting.

The MSCI emerging market index was down 0.20 per cent at 1,040.22. However, the Indian Sensex closed 0.96 per cent higher at 36,652.06. The Indian rupee weakened further to close 0.08 per cent higher at 72.695.