UPDATE 11-Oil surges amid OPEC caution to offset Iran sanctions
Published Apr 23, 2019 17:37
UPDATE 11-Oil surges amid OPEC caution to offset Iran sanctions
* Gulf OPEC members ready to raise output if demand there -sources
* Saudi output to rise but not due to Iran sanction -sources
* U.S. reiterates goal to cut Iran oil exports to zero
* Spare capacity of producers such as Saudi could fill gap
* U.S. crude inventories rise more than expected in week -API (Adds API inventory data)
By Jessica Resnick-Ault
NEW YORK, April 23 (Reuters) - Oil prices hit their highest in about six months on Tuesday as sources said Gulf OPEC members were ready to raise output only if there was demand before offsetting any shortfall following a U.S. decision to end waivers for buyers of Iranian crude.
Output in Saudi Arabia, the world's top oil exporter and de facto leader of the Organization of the Petroleum Exporting Countries, will rise in May, but that it is not related to Iran sanctions, the sources said. sources said Saudi production in May will also stay within its production target under a OPEC+ supply-cutting deal, which has led global supply cuts since the start of the year aimed at propping up crude prices. The group is set to meet in June to discuss output policy.
The United States on Monday demanded buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran's eight biggest buyers, most of them in Asia, to continue importing limited volumes. President Donald Trump said he was confident that Saudi Arabia and the United Arab Emirates will fulfill their pledges to make up the difference in oil markets, a U.S. official told reporters Monday. Saudis aren't rushing to fill what could be a substantial supply gap in the market," said John Kilduff, a partner at Again Capital Management LLC. "The market has gotten tight globally over the course of the last several months, primarily because of the efforts of Saudi Arabia."
U.S. crude futures CLc1 settled up 75 cents, or 1.1 percent, at $66.30 a barrel, after hitting an intraday high of $66.60, the highest since Oct. 31.
Brent crude LCOc1 rose 47 cents, or 0.6 percent, to $74.51 a barrel. The global benchmark earlier touched $74.73, a level not seen since Nov. 1.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among OPEC at around 3 million barrels per day (bpd), but April exports have shrunk to below 1 million bpd, according to tanker data and industry sources. market structure for U.S. crude changed Monday, with the front month trading at a premium to the next month. The trend, known as backwardation, intensified on Tuesday with the largest premium since December.
Brent was also in backwardation, hitting its highest front-month premium in three weeks.
"The backwardation is indicative of what is really driving things," Again's Kilduff said.
Get The App
The premium for front-month crude shows the immediate supply constraints are seen as time-limited, given Saudi Arabia's ability to tap excess capacity, he said.
China, Iran's largest customer with imports of about 585,400 bpd of crude oil last year, formally complained to Washington over the move, which a Chinese foreign ministry spokesman said "will contribute to volatility in the Middle East and in the international energy market." move to increase pressure on Iran came amid other sanctions Washington has placed on Venezuela's oil exports and as combat threatens to disrupt Libya's exports. crude stocks rose more than expected last week, while gasoline inventories increased and distillate stocks drew, data from industry group the American Petroleum Institute showed on Tuesday.
Crude inventories rose by 6.9 million barrels in the week to April 19 to 459.6 million, compared with analysts' expectations for an increase of 1.3 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 389,000 barrels, API said. GRAPHIC: Iran seaborne crude oil & condensate exports
https://tmsnrt.rs/2DE8CHt GRAPHIC: Russian, U.S. & Saudi crude oil production
https://tmsnrt.rs/2EUHeFO
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.