Crude oil advances amid signs of a tighter U.S. oil picture
Pubdate：2018-08-31 09:38
Source：JESSICA SUMMERS
Click：
NEW YORK (Bloomberg) -- Crude broke through $70/bbl for the first time in a month as shrinking stockpile levels in the U.S. combined with expectations of lower Iran exports point to tighter markets.
Futures in New York advanced as much as 0.8% on Thursday. Two straight weeks of declines in U.S. crude inventories combined with lower fuel supplies and flat production helped push crude through the key psychological level.
“At the end of the day, what we are seeing is a tighter U.S. market. We are seeing stagnation on the oil production side,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “This along with an economy that’s still running pretty firm in the United States,” as well as sanctions on Iran has kept prices higher, he said.
Some of Iran’s customers are already facing difficulties buying the country’s crude even before sanctions are enforced on Nov. 4. Meanwhile, Energy Information Administration data released Wednesday showed crude production at a standstill, while oil stockpiles fell 2.57 MMbbl last week.
West Texas Intermediate crude for October delivery climbed 35 cents to $69.86/bbl at 9:31 a.m. on the New York Mercantile Exchange, after earlier rising as high as $70.08. Total volume traded was about 40% below the 100-day average.
Brent for October settlement added 31 cents to $77.45/bbl on the London-based ICE Futures Europe exchange.
The global benchmark crude traded at a $7.79 premium to WTI, the widest since mid-June. JBC Energy said it wouldn’t be surprised to see a double-digit spread amid bottlenecks in the U.S. and a tightening Brent market.
“The oil market is once again tightening after a short period in late June and early July when it was likely oversupplied,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Iranian oil-export declines are already visible well in advance of U.S. oil-related sanctions.”
