Oil price hits two-month high on tighter US market(Update) - Business News | The Star Online

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Oil price hits two-month high on tighter US market(Update)


Brent crude futures, the international benchmark for oil prices, were at $52.67 per barrel at 0247 GMT on Monday, up 15 cents or 0.3 percent. Prices hit $52.76 per barrel earlier in the day, their highest since May 25.  U.S. West Texas Intermediate (WTI) crude futures were up 16 cents, or 0.3 percent, at $49.87 per barrel, the highest since June 30.

Brent crude futures, the international benchmark for oil prices, were at $52.67 per barrel at 0247 GMT on Monday, up 15 cents or 0.3 percent. Prices hit $52.76 per barrel earlier in the day, their highest since May 25. U.S. West Texas Intermediate (WTI) crude futures were up 16 cents, or 0.3 percent, at $49.87 per barrel, the highest since June 30.

SINGAPORE: Oil prices hit a two-month high on Monday, lifted by a tightening U.S. crude market and the threat of sanctions against OPEC-member Venezuela.

Brent crude futures, the international benchmark for oil prices, were at $52.67 per barrel at 0247 GMT on Monday, up 15 cents or 0.3 percent. Prices hit $52.76 per barrel earlier in the day, their highest since May 25.

U.S. West Texas Intermediate (WTI) crude futures were up 16 cents, or 0.3 percent, at $49.87 per barrel, the highest since June 30.

The price rises put both crude benchmarks on track for sixth consecutive session of gains.

Oil prices have risen around 10 percent since the last meeting of leading members by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, when the group discussed potential measures to further tighten oil markets.

"A combination of factors seems to be driving the newly found optimism. U.S. inventories are showing massive drawdowns, Saudi Arabia seems intent on playing its role as the world's swing producer (and) impending sanctions on Venezuela by the U.S. will almost certainly be oil price supportive," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

The United States is considering imposing sanctions on Venezuela's vital oil sector in response to Sunday's election of a constitutional super-body that Washington has denounced as a "sham" vote.

But traders said the biggest price supporter was currently a tightening U.S. oil market.

"Strong increases in the price of oil ... (were) fueled in large part by the substantial draw-downs in U.S. inventories over the past several weeks," said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

"A continuation of this trend could indicate the oil market is rebalancing thanks to the production cuts by OPEC and Russia," he added.

After rising by more than 10 percent since mid-2016, U.S. oil production dipped by 0.2 percent to 9.41 million barrels per day (bpd) in the week to July 21.

U.S. crude inventories have fallen by 10 percent from their March peaks to 483.4 million barrels.

Drilling for new U.S. production is also slowing, with just 10 rigs added in July, the fewest since May 2016.

The tighter market was also visible in the price curve, which shows backwardation in the front end.

Backwardation is a market condition in which prices for immediate delivery of a product are higher than those later on.

Brent prices for delivery in September are currently around 35 cents above those for October. - Reuters

Earlier report:

SINGAPORE: Oil prices rose to their highest levels since May early on Monday as a dip in U.S. output tightened the market and the threat of sanctions against Venezuela kept traders on edge.

Brent crude futures, the international benchmark for oil prices, were trading up 18 cents or 0.3 percent at $52.70 per barrel at 0009 GMT. Prices earlier hit $52.76, the highest level since May 25.

U.S. West Texas Intermediate (WTI) crude futures were up 11 cents, or 0.2 percent, at $49.82 per barrel.

The gains put both crude benchmarks on track for six consecutive days of gains.

Oil prices have risen nearly 10 percent since the last meeting of leading members by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, when the group discussed potential measures to further tighten oil markets.

"WTI threatened to break through $50 per barrel, while Brent pushed above $52 per barrel as the fundamentals continue to suggest a more balanced crude oil market," ANZ bank said on Monday.

"The front of end of the curve has moved into backwardation, a sign the spot physical market is tightening," it added.

Backwardation is a market condition in which prices for immediate delivery of a product are higher than those later on.

Brent prices for delivery in September are currently around 35 cents above those for October. <0#LCO:>

After rising by more than 10 percent since mid-2016, U.S. oil production dipped by 0.2 percent to 9.41 million barrels per day (bpd) in the week to July 21. <C-OUT-T-EIA>

U.S. crude oil inventories have fallen by almost 10 percent from their March peaks to 483.4 million barrels. <C-STK-T-EIA>

Drilling for new U.S. production is also slowing down, with just 10 rigs added in July, the fewest of any month since May 2016.

Markets were also concerned by reports that the Trump administration is considering imposing U.S. sanctions on Venezuela's vital oil sector in response to Sunday's election of a constitutional super-body that Washington has denounced as a "sham" vote. - Reuters

Oil & Gas , Markets

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