Oil Near Week's High as Supply Data Tempers Saudi View on Prices

Oil Near Week's High as Supply Data Tempers Saudi View on Prices
Brent oil held near the highest level in a week as investors weighed a potential gain in US crude stockpiles against Saudi Arabia's comfort with prices rising above $80 a barrel.

(Bloomberg) -- Brent oil held near the highest level in a week as investors weighed a potential gain in U.S. crude stockpiles against Saudi Arabia’s comfort with prices rising above $80 a barrel.

Futures in London were 0.2 percent lower near $79 a barrel after Tuesday’s 1.3 percent gain. Saudi Arabia believes it may no longer be possible to avoid higher prices as U.S. sanctions on Iranian exports crimp supply, according to people familiar with the kingdom’s view. Meanwhile, an industry report Tuesday showed U.S. crude inventories increased last week, defying expectations for a decline ahead of government data due Wednesday.

Brent has increased more than 11 percent from the lows of August as sanctions curtain Iran’s exports and Venezuela’s production continues to suffer. Still, the escalating U.S.-China trade tension is causing concerns over demand and keeping prices below $80 a barrel. Investors and traders are looking to see how OPEC and its allies react to the contrasting pressures in the market when they meet this weekend in Algiers.

The American Petroleum Institute’s inventory data “tempered the market’s enthusiasm from the headline that Saudi Arabia was comfortable with $80-plus oil,” said Harry Tchilinguirian, head of commodity-market strategy at BNP Paribas SA. “So we wait for the EIA release today to see whether we get a confirmation of the API data.”

Brent for November settlement traded at $78.81 a barrel on the ICE Futures Europe exchange, down 22 cents, at 1:23 p.m. in London, after advancing 98 cents on Tuesday. The contract traded at a $9.26 premium to West Texas Intermediate for the same month.

WTI crude for October delivery, which expires Thursday, was little changed at $69.85 on the New York Mercantile Exchange, after Tuesday’s 94 cents increase. Total volume traded was about 40 percent below the 100-day average.

The API data showed that crude stockpiles increased by 1.25 million barrels last week, while those in the storage hub at Cushing in Oklahoma fell. A Bloomberg survey of analysts forecasts a 2.5 million-barrel decline in nationwide inventories.

Some other key oil-market figures, news and events:

Iranian Oil Minister Bijan Namdar Zanganeh said he won’t attend the global producers’ meeting in Algeria. Iran’s OPEC governor will represent the nation. Venezuela plans to use a new $5 billion loan from China to nearly double oil production that’s fallen to a seven-decade low. Saras says its Sarroch refinery tanks suffered a lightning strike and a fire last night. Operations at the oil port were earlier said to have had a temporary halt. Midland crude prices have narrowed to the smallest discount to WTI since June amid preparations to begin service on the expanded Plains-operated Sunrise crude pipeline.

With assistance from Tsuyoshi Inajima.To contact the reporters on this story: Sharon Cho in Singapore at ccho28@bloomberg.net; Alex Longley in London at alongley@bloomberg.net. To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Rakteem Katakey, John Deane.


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