Oil posts gain on supply fears

new york — Crude rose last month as sanctions on Iranian oil stoked concern that supplies will contract, overshadowing speculation that a US-China trade war will weaken demand.

Futures in London settled 4.3 per cent higher in August, the biggest monthly gain since April, and US crude also rose for the month. Yet, both benchmarks faltered on Friday as Saudi Arabia was said to raise its crude output in August from July levels.

“You are seeing month over month gains, but I am seeing this as a range-bound market,” said Rob Haworth, who helps oversee $151 billion at US Bank Wealth Management in Seattle. “Saudi Arabia and Russia are increasing production, US production could increase, that ultimately limits the upside here.”

President Donald Trump reimposed sanctions on Iran, pulling the US out of the nuclear accord with the Islamic republic in May.

Brent is more vulnerable than West Texas Intermediate crude to any impact on Iranian supplies. Both benchmarks have gained last month as American stockpiles shrink and domestic production plateaus. WTI climbed above $70 a barrel in New York last week for the first time since late July.

WTI for October delivery slipped 45 cents to settle at $69.80 a barrel on the New York Mercantile Exchange. Total volume traded was about 43 per cent below the 100-day average. Futures posted a 1.5 percent advance this month. Brent futures for October delivery, which expire Friday, fell 35 cents to settle at $77.42 a barrel on the ICE Futures Europe exchange. Brent’s at a $7.62 premium to WTI. The more-active November Brent contract slid 38 cents.

“There is increasing concern about the impact of the sanctions on Iran,” said John Kilduff, a partner at New York-based hedge fund Again Capital. “There is a sense that things are going to get quite tight.”

There is increasing concern about the impact of the sanctions on Iran

John Kilduff, partner at New Yorkbased hedge fund Again Capital