Easing trade tensions give slight boost to oil prices

Easing trade tensions give slight boost to oil prices

Easing trade tensions give slight boost to oil prices

Industry analysts also said the market situation was further fuelled by the success of the Organisation of Oil Exporting Countries, OPEC and Non-OPEC members to withdraw excess crude from the market.

"The geopolitical tinderbox around the Middle East seems to be encouraging buyers, while global supply demand fundamental are staying "strong enough" to keep the sellers at bay for now", analysts at TAC Energy said.

Iran produces roughly 4% of the world's oil, with the looming prospect of American sanctions set to cut off some of that supply.

Oil demand growth, meanwhile, should average 98.85 million barrels per day for 2018, an increase of just 25,000 barrels per day from the April forecast.

The number of rigs drilling for oil in the US rose by 10 last week to 844 rigs, the highest in more than three years.

USA crude prices are at the steep discount to Brent as a more than 25 percent rise in US crude production to 10.7 million barrels per day has left the American market well supplied.

"Although oil could venture higher in the near term, robust production from USA shale remains a threat to higher oil prices", he said. The gap between global and US oil prices widened as new figures showed that producers in the USA are ramping up quickly.

Both oil futures contracts hit their highest since November 2014 last week at 78 dollars and 71.89 dollars a barrel, respectively as markets anticipated a sharp fall in Iranian crude supply once USA sanctions bite later this year.

Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT and US light crude rose 10 cents to 70.80 dollars.

The increase was mainly the result of higher crude production in Saudi Arabia - the world's largest crude exporter and the de facto head of OPEC - and Algeria, the report said. Diesel futures rose 1.24% to $2.2496 a gallon.

Under the sanctions law passed in 2011, the U.S. Energy Information Administration, the independent statistics arm of the Department of Energy, must issue reports to Congress on global oil production in countries other than Iran every two months.

Prices received a boost last week following President Donald Trump's announcement on May 8 that the USA would withdraw from the Iranian nuclear deal.

Capital Economics analysts said OPEC is well-positioned to offset any fall in output from Iran caused by the re-imposition of sanctions on the country.

"The question is now whether that strong rally can be sustained and maintained", said Ole Hansen, head of commodity strategy at Saxo Bank.

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