SINGAPORE: Oil prices held firm on Tuesday, with US fuel markets seen to be tightening, although the release of crude from the American strategic reserve somewhat offset an expected supply cut due to upcoming sanctions against Iran.
Front-month US West Texas Intermediate (WTI) crude futures CLc1 were up 30 cents, or 0.45 per cent, at 0651 GMT, at $66.73 per barrel. The contract expires on Tuesday.
Traders said US markets were lifted by a tightening outlook for fuel markets in the coming months.
Inventories in the United States for refined products such as diesel and heating oil for this time of year are at their lowest in four years.
This is occurring just ahead of the peak demand period for these fuels, with diesel needed for tractors to harvest crops and the arrival of colder weather during the Northern Hemisphere autumn raising consumption of heating oil.
Outside the United States, markets focused on US sanctions against Iran, which from November will target its oil sector.
International Brent crude oil futures were down 9 cents, at $72.12 a barrel. Washington on Monday offered 11 million barrels of high-sulphur, or sour, crude from its Strategic Petroleum Reserve (SPR) for delivery from October 1 to November 30. The released oil could offset expected supply shortfalls from US sanctions against Iran.
Because of the sanctions, French bank BNP Paribas said it expected oil production from the Organization of the Petroleum Exporting Countries (Opec), of which Iran is a member, to fall from an average of 32.1 million barrels per day (bpd) in 2018 to 31.7 million bpd in 2019.
Still, traders said overall market sentiment was cautious because of concerns over the demand outlook amid the trade dispute between the United States and China. A Chinese trade delegation is due in Washington this week to resolve the dispute, but US President Donald Trump said in an interview on Monday he does not expect much progress, and that resolving the trade dispute with China will “take time”. — Reuters
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