Oil Futures Near Four-year High

Oil Futures Near Four-year High
Crude approached a four-year high after OPEC signaled it may not replace Iranian oil that's disappearing from global markets as U.S. sanctions loom.

(Bloomberg) -- Crude approached a four-year high after OPEC signaled it may not replace Iranian oil that's disappearing from global markets as U.S. sanctions loom.

Futures rose 0.8 percent in London on Tuesday. OPEC shrugged off the threat to Iranian supplies over the weekend, spurring some of the world's most-sophisticated traders to forecast a return to $100-a-barrel oil. At such prices, crude demand "will be annihilated," Petromatrix GmbH's Olivier Jakob said. In the U.S., oil exports probably surged last week, eroding stockpiles for a sixth straight week, according to a Bloomberg survey.

"The market is assuming that OPEC will behave as they claimed they will at this meeting, but I don't think that's necessarily something that will be long-lived," said Thomas Finlon, director of Energy Analytics Group in Wellington, Florida. A big reduction in Iranian exports "will cause the market to tighten up."

Crude futures in London and New York have advanced as the Organization of Petroleum Exporting Countries and allied countries indicated they intend to match output closely to demand. That's despite U.S. President Donald Trump's pressure to release more supplies and lower prices.

Trump said OPEC is "ripping off the world," in an address to the United Nations on Tuesday in New York. Meanwhile, Iranian oil tankers are starting to disappear from global satellite tracking systems as the implementation date for the next round of sanctions approaches.

Trading was more subdued in West Texas Intermediate futures. The benchmark for American crude closed little changed in New York.

Brent for November settlement rose 67 cents to settle at $81.87 a barrel on the ICE Futures Europe exchange. The global benchmark traded at a $9.59 premium to West Texas Intermediate crude.

WTI for November delivery rose 20 cents to $72.28 on the New York Mercantile Exchange. Total volume traded was about 16 percent below the 100-day average.

"Oil prices at $72.00 is quite an interesting level we haven't seen in a long time," said Phil Streible, senior commodity broker at RJ O'Brien & Associates LLC. "Brent and WTI have been some of the better performing commodities over the last week, so you're definitely going to have fund managers jumping on board trying to ride that wave a little bit higher."

In the U.S., crude stockpiles fell by an estimated 1.5 million barrels last week, according to the median estimate of analysts surveyed by Bloomberg. At the key pipeline hub in Cushing, Oklahoma, inventories probably dropped by 150,000 barrels, a Bloomberg forecast showed.

The American Petroleum Institute is scheduled to release its weekly count of stockpiles later Tuesday, followed by the U.S. government's tally on Wednesday.

--With assistance from Tsuyoshi Inajima, Alex Longley and Jessica Summers.

To contact the reporter on this story: Samuel Robinson in New York at srobinson145@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, Christine Buurma

©2018 Bloomberg L.P.


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