Oil steady on high Opec supply

LONDON: Oil prices steadied on Monday, weighed down by rising supply from Opec and the United States but supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November. Brent crude oil LCOc1 was up 20 cents at $77.84 a barrel by 0745 GMT. US crude CLc1 was unchanged at $69.80.
The two benchmarks have risen strongly over the last two weeks with Brent gaining around 10 per cent on expectations that global supply will tighten later this year.
“The contracts are in a strong uptrend, but one that looks at the moment to be a bit tired,” said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates.
Output from the Organization of the Petroleum Exporting Countries rose 220,000 barrels per day (bpd) in August to a 2018 high of 32.79 million bpd, a Reuters survey found.
Production was boosted by a recovery in Libyan production and as Iraq’s southern exports hit a record.
US drillers added oil rigs for the first time in three weeks, energy services firm Baker Hughes reported on Friday, increasing the rig count by 2 to 862. The high rig count has helped lift US crude oil production by more than 30 per cent since mid-2016 to 11 million bpd.
But investors are looking ahead to later this year when US sanctions are expected to curb exports from Iran, the third biggest producer in Opec.
Stephen Innes, head of trading for Asia-Pacific at brokerage OANDA, said Brent was “supported by the notion that US sanctions on Iranian crude oil exports will eventually lead to constricted markets”.
Edward Bell, analyst at Emirates NBD bank in Dubai, agreed:
“Iranian production is already showing signs of decline, falling by 150,000 bpd last month… (as) importers of Iranian barrels will already be moving away from taking shipments.”
Meanwhile, trade disputes between the United States and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon.
China’s manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff, a private survey showed on Monday. — Reuters