June 24, 2018

Oil Rises To March High On Middle East Tensions, Venezuela Concerns

22 March 2018, 01:33 | Simon Arnold

Oil Dips but Tensions Over Iran, Saudi Nukes Support Crude Price

US oil output expected to overtake Russia's

Crude prices increased around 2.1 percent on Tuesday amid concerns that the USA could withdraw from the Iranian nuclear deal in addition to fears that rising tensions in the Middle East could hinder the security of the crude supply.

Stocks fell 2.7 million barrels in the week ended March 16 to 425.3 million barrels, according to the API, compared with analysts' expectations for an increase of 2.6 million barrels.

WTI Crude Oil at 63.75 may test resistance 64 and come off to 62.50 by the end of this week.

Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) to curb supplies and bolster prices. Saudi Arabia called the 2015 nuclear deal between Iran and world powers a "flawed agreement" on Monday, on the eve of a meeting between Crown Prince Mohammed bin Salman and U.S. President Donald Trump. Still, investors will be wary of US supplies, which have threatened to undermine OPEC's efforts to eliminate a global glut.

The U.S.' increasing arms sales to Saudi Arabia also raises concerns that tensions between the Kingdom and Iran could threaten the security of oil supplies from the region.

"I think there are conflicting views on the USA crude stockpiles and we should wait for the EIA data to confirm the decline", said Hyundai Futures' Yun.

Heating oil futures rose 2.2 percent to finish at $1.9495 a gallon, their highest settle since late February.

United States output is now higher than that of top exporter Saudi Arabia. Prices rose $1.37, or 2.1 percent, to $67.42 on Tuesday.

Should the United States reimpose sanctions against Iran, energy consultancy FGE said that would likely result in a 250,000 to 500,000 barrels per day (bpd) drop in its exports by year-end. A Bloomberg survey ahead of the government report forecast stockpiles rose by 3.25 million barrels.

Official US production and inventory data will be released by the Energy Information Administration (EIA) later on Wednesday.

Looming over oil markets has been surging USA crude production, which has risen by more than a fifth since mid-2016, to 10.38 million bpd, overtaking top exporter Saudi Arabia and putting the United States within reach of Russia's 11 million bpd.

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