Oil prices reach highest since November, 2014 on Venezuela, Iran worries

US Crude Edges Toward $70 as Traders Brace for Iran Decision

US Crude Edges Toward $70 as Traders Brace for Iran Decision

Even though U.S. President Donald Trump has yet to announce whether he'll pull out of the 2015 Iranian nuclear deal as a May 12 deadline nears, American officials already are positioning for post-accord negotiations. Iran's oil exports could credibly be curtailed by 200,000-300,000 bpd, ' RBC Capital Markets analyst Helima Croft said in a note.

"Fresh sanctions, which would remove some of Iran's crude supplies from the global market, will tighten the balance between demand and supply, and support crude prices", Japan Oil, Gas & Metals National Corp chief economist Takayuki Nogami said by telephone from Tokyo. If they do not, Mr Trump has said he would refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic.

If you look at OPEC, compliance is the best it has ever been. Member nations of OPEC and Russian Federation earlier engineered a large output cut lead by Saudi Arabia, which is seeking to push oil prices up to $80 a barrel to help fund its planned economic overhaul.

After troughing in the low $40s last summer, oil has marched steadily higher in recent months. According to a Reuters report, the current backwardation in Brent is the most extreme it has been in more than 25 years, putting it in the 91st percentile of all trading days since 1992. Output dropped to 1.50 million bpd in April, the survey found, a new long-term low.

Even though some of the decline was due to unintended problems, the reality is that the market badly misjudged OPEC's resolve to erase the world of the oil glut.

Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter the global energy market is sensitive to any shortages because the big surplus that dragged oil prices below $30 per barrel a little more than two years ago has been drained in part by a decision from the Organization of Petroleum Exporting Countries to limit production. Like I said before, this is not your daddy's OPEC.

USA oil firm ConocoPhillips has moved to take key Caribbean assets of Venezuela's state-run PDVSA to enforce a $2 billion arbitration award, actions that could further impair PDVSA's declining oil production and exports.

Data from Baker Hughes last Friday showed that the number of active oil-drilling rigs in the US - a proxy for activity in the sector - rose by nine to 834 last week. The oil-rig count had logged gains in each of the last four weeks.

Looking overseas, about 60 per cent of total global demand growth comes from Asia, with China recently surpassing the U.S.to become the world's largest oil importer. West Texas rose by 1% on Monday, a hike that adds up to 2.5% accumulated last week. Make sure your hedges are in place.

The Price Futures Group's mission is to provide traders and investors with industry-leading trading solutions, informative market analysis, and cutting-edge technologies which enable efficient decision-making.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.