Sup­ply dis­rup­tions and ris­ing de­mand keep oil on the boil

Zambian Business Times - - COMMODITIES -

Brent crude fu­tures are headed for its sixth straight week of gains, and US bench­mark WTI fu­tures are on track for their third weekly in­crease

Brent oil prices rose on Friday and were set for a sixth straight week of gains, boosted by strong de­mand, loom­ing sanc­tions on Iran, plum­met­ing Venezue­lan pro­duc­tion and Nige­rian dis­rup­tions, as Saudi Ara­bia moved to as­suage sup­ply con­cerns.

Brent crude fu­tures were at $79.69 a bar­rel at 9.13am GMT, up 39c. The in­ter­na­tional bench­mark broke through $80 for the first time since Novem­ber 2014 on Thurs­day.

US West Texas In­ter­me­di­ate crude fu­tures were at $71.63 a bar­rel, up 14c and set for a third straight week of gains.’

Bri­tish bank Bar­clays said it ex­pected av­er­age prices of $70 a bar­rel for Brent this year and $65 a bar­rel for 2019, up from es­ti­mates of $63 and $60 pre­vi­ously.

"Since last month, Venezuela’s pro­duc­tion de­cline, Trump’s Iran sanc­tions de­ci­sion, a new dis­rup­tion in Nige­ria, and anec­do­tal ev­i­dence from a new round of pro­ducer earn­ings re­quire a price fore­cast re­vi­sion," the bank said.

Ris­ing prices have al­ready raised the alarm among big oil-con­sum­ing coun­tries. OPEC king­pin Saudi Ara­bia said on Thurs­day it would make sure the world was ad­e­quately sup­plied with oil, just as ma­jor con­sumer In­dia ex­pressed frus­tra­tion with ris­ing prices.

Saudi En­ergy Min­is­ter Khalid al-Falih had called In­dian Pe­tro­leum Min­is­ter Dhar­men­dra Pradhan to as­sure him that sup­port­ing global eco­nomic growth was "one of the king­dom’s key goals", the Saudi min­istry said.

Crude prices have re­ceived broad sup­port from vol­un­tary sup­ply cuts led by the Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC).

The In­ter­na­tional En­ergy Agency said oil in­ven­to­ries in the de­vel­oped world had al­ready dipped be­low the five-year av­er­age, a mea­sure tar­geted by OPEC and its al­lies.

Be­yond OPEC’s cuts, strong de­mand, falling out­put from Venezuela and a US an­nounce­ment this month that it would re­new sanc­tions against OPEC mem­ber Iran have helped push up Brent by 20% since the start of the year.

US in­vest­ment bank Jef­feries said sanc­tions against Iran could re­move more than 1-mil­lion bar­rels a day from the mar­ket.

Bar­clays said out­put from Venezuela could fall be­low 1-mil­lion bar­rels a day. The coun­try, also an OPEC mem­ber, pro­duced about 1.5-mil­lion bar­rels a day in April.

In Nige­ria, Shell de­clared force ma­jeure on Thurs­day on load­ings of Bonny Light crude. Ex­ports of the grade were ex­pected to run at nearly 200,000 bar­rels a day in June. Nige­ria’s For­ca­dos stream was also ex­pe­ri­enc­ing de­lays due to a pipe­line leak.

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