Oil holds near $80, supply concern expected to underpin prices

Posted September 22, 2018

U.S. Energy Secretary Rick Perry said in an interview with Reuters on Friday that he does not foresee any price spikes and that the countries, the world's top three oil producers, can between them raise global output in the next 18 months.

US West Texas Intermediate (WTI) crude was up 90 cents at $69.80 per barrel, after rising over $1 to $69.95 a barrel. Washington aims to cut Iran's oil exports down to zero to force Tehran to re-negotiate a nuclear deal.

OPEC ministers are also slated to meet this Sunday, but no decisions or adjustments are expected to be made while the OPEC group meets to discuss output policies and their compliance.

U.S. President Donald Trump announced on Monday that Washington would slap 10% tariffs on another $200 billion Chinese imports, except smart watches from Apple (NASDAQ:AAPL) and Fitbit and other consumer products including bicycle helmets and baby auto seats.

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Benchmark Brent crude is already nearing 80 U.S. dollars a barrel and some believe this figure may go even higher. "The impact on economic growth is slowly dripping in, which again hurts oil prices", said Wang Xiao, head of crude research at Guotai Junan Futures.

Iran's crude exports are already falling as the US prepares to curb Tehran's ability to sell oil and participate in global financial markets.

"The growing trade dispute has hurt trading sentiment".

Meanwhile, an industry report Tuesday showed US crude stockpiles increased 1.25 million barrels last week, defying expectations for a decline ahead of government data Wednesday.

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Oil prices were steady on Wednesday as concerns that producers will not be able to respond to a shortfall in supply once USA sanctions on Iran are enacted outweighed a gain in stockpiles in the United States, the world's biggest oil user.

Oil prices firmed on Tuesday after Saudi Arabia indicated it was comfortable with a higher price range ahead of a meeting between major producing countries in Algeria.

U.S. crude futures CLc1 were up $1.08 at $70.93 a barrel by 11:15 a.m. [1515 GMT], after the U.S. Energy Information Administration said crude and gasoline stockpiles fell last week.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, including the world's biggest producer Russian Federation, are meeting on September 23 in Algiers, Algeria, to discuss how they can allocate supply increases within their quota framework to offset the loss of Iranian oil supply.

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United States crude stockpiles rose by 1.2 million barrels to 397.1 million in the week to September 14, the American Petroleum Institute said.