Bullish oil streak pro­pels Brent to strong­est Q3

The Gulf Today - Business - - Front Page -

AM­S­TER­DAM: Oil edged higher on Fri­day as ten­sions around Iraqi Kur­dis­tan threat­ened the re­gion’s crude sup­plies, help­ing Brent prices to their strong­est third-quar­ter per­for­mance since 2004.

Global bench­mark Brent crude LCOC1 was up 1 cent at $57.42 a bar­rel at 1122 GMT, notch­ing up a third quar­ter gain of around 20 per cent.

The con­tract had reached its high­est in more than two years ear­lier in the week, re­sult­ing in a fifth con­sec­u­tive weekly gain. This per­for­mance is Brent’s long­est weekly bull run since June 2016.

US crude CLC1 traded flat at $51.56 a bar­rel, on track for its strong­est third quar­ter in 10 years and its long­est streak of weekly gains since Jan­uary.

“Oil prices re­main firm with the back­drop of ten­sions be­tween Iraq/ Turkey/iran and Kur­dis­tan still threat­en­ing to halt up to 600,000 bar­rels per day of pro­duc­tion from the semi-au­ton­o­mous re­gion,” said Jamie Camp­bell, head of nat­u­ral re­sources at Pan­mure Gor­don.

Iraq’s Kurds en­dorsed se­ces­sion by nine to one in a ref­er­en­dum on Mon­day that has an­gered Turkey, the cen­tral gov­ern­ment in Bagh­dad, and other pow­ers, who fear the vote could lead to re­newed con­flict in the oil-rich re­gion.

Turk­ish Pres­i­dent Tayyip Er­do­gan called the vote il­le­git­i­mate and has threat­ened to break with past prac­tice and deal only with the Bagh­dad gov­ern­ment over oil ex­ports from Iraq.

“No rapid so­lu­tion to the cri­sis can be ex­pected, which should con­tinue to lend sup­port to the oil price,” an­a­lysts at Com­merzbank wrote.


Most oil that flows through a pipeline from Iraq to Turkey comes from Kur­dish sources and a cut-off would se­verely dam­age the Kur­dish Re­gional Gov­ern­ment, which re­lies on sales of crude for al­most all its hard cur­rency rev­enues.

So far, oil flows through the pipeline have been nor­mal.

Oil price gains have also been sup­ported this month by an­tic­i­pated re­newed de­mand from US re­fin­ers that were re­sum­ing op­er­a­tions af­ter shut­downs due to Hur­ri­cane Har­vey.

Even more bullish views have al­ready started to ap­pear in the oil op­tions mar­ket that has seen a spike in ac­tiv­ity at $100 a bar­rel, in­di­cat­ing some oil bulls are bet­ting the price could trade around that level by this time next year.

How­ever, Mid­dle Eastern oil pro­duc­ers are con­cerned the re­cent price rise will in­cen­tivise more U.S. shale pro­duc­tion and push prices lower again.

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