Oil Surges to Highest Since 2014 as Global Supply Concerns Mount
(Bloomberg) -- Oil jumped to the highest level in nearly four years as a slowdown in American drilling added to concern over supply losses from Iran and Venezuela.
Crude futures gained 2.8 percent in New York on Monday. As U.S. sanctions dissuaded importers from purchasing Iranian oil, President Donald Trump and King Salman bin Abdulaziz of Saudi Arabia discussed efforts to maintain supplies. Meanwhile, the number of rigs drilling for American crude dropped for a second week, signaling a potential slowdown in output growth.
“Right now, we’re just in a bull market for oil because of the prospects of a very tight market later on in the year,” said John Kilduff, founding partner at New York-based hedge fund Again Capital LLC.
Oil has rallied to levels last seen in 2014 as supply disruptions from Iran to Venezuela continued to fracture the global market. Top traders have forecast crude may top $100 a barrel amid speculation that backup supplies are scarce. Even so, BP Plc cautioned that the rally may not be sustainable as escalating trade tensions between the U.S. and China imperil demand.
“The supply situation looks fragile indeed,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich.
West Texas Intermediate for November delivery rose $2.05 to $75.30 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 24, 2014.
Brent for December settlement climbed $2.25 to $84.98 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $9.84 premium to the West Texas Intermediate contract for the same month.
Following Trump’s most-recent criticism of the Organization of Petroleum Exporting Countries over high prices, the president and the Saudi king talked on the phone Saturday about a strategic partnership and global economic growth, Al Arabiya TV reported, without providing more details. The White House said “issues of regional concern”’ were discussed.
In the U.S., onshore rigs targeting oil fell by three last week to 863, according to data released by Baker Hughes on Friday. The tally in the Permian Basin of West Texas and New Mexico dropped by two to 486.
Other oil-market news: Gasoline futures rose 4.18 cents to $2.1275 a gallon. Oil exports from Iran fell to their lowest level in 2 1/2 years. Kuwait has all but stopped shipping crude to the U.S. for the first time since the aftermath of Saddam Hussein’s invasion in 1990, eroding an economic link between Washington and the Arab petro-monarchy.
With assistance from Sharon Cho and Grant Smith. To contact the reporter on this story: Samuel Robinson in New York at firstname.lastname@example.org. To contact the editors responsible for this story: Simon Casey at email@example.com David Marino, Will Wade.
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