Published: Sat, April 14, 2018
Business | By Kate Woods

Oil steady, near three-year highs on geopolitics, tighter supply

Oil steady, near three-year highs on geopolitics, tighter supply

Brent crude has risen 7% over the last week to $72.3 a barrel, the highest since December 2014 while West Texas Intermediate (WTI) climbed 3.3% to $65.5 a barrel on Wednesday. The potential American strike follows a chemical attack on the rebel-held city Douma, allegedly by forces loyal to Syrian President Bashar Assad.

These bullish factors more than offset pressure from a USA government report showing crude oil inventories rose by 3.3 million barrels, while domestic production hit a record 10.53 million barrels per day (bpd).

At 1030 GMT, June ICE Brent crude futures were trading at $71.59/b, down 44 cents from Tuesday's settlement, after hitting its highest since November 2014 earlier in the morning.

More news: Russian Federation spies Skripals for five years

Some major airlines were re-routing flights after Europe's air traffic control agency urged caution for aircraft flying in the eastern Mediterranean due to possible air strikes on Syria.

The market is also keeping an eye on developments out of Syria, after reports an air base near Homs was struck by missiles.

After several sessions of strong gains, oil prices edged lower nonetheless. U.S. WTI crude futures CLc1 were up 25 cents at $67.07.

More news: Alfie Evans: Police at Alder Hey Hospital protest

Market Watch reports in its article Oil prices rebound as U.S., China trade tensions ease for now that the market saw a "nice relief rally...after U.S. officials backpedalled on a trade war with China over the weekend", said Colin Cieszynski, chief market strategist at SIA Wealth Management Inc. "Get ready Russian Federation, because they will be coming, nice and new and 'smart!'"

Adding to rising storage levels, the U.S. Energy Information Administration (EIA) said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing U.S. shale output. Analysts polled by S&P Global Platts forecast a 100,000-barrel increase in stockpiles and a 2 million-barrel decline in gasoline stockpiles.

"It's not like Syria is a huge oil exporter or consumer in itself, but the fear is if something should escalate in the region, it could spread to areas where there's a lot more oil production at stake", said Michael Poulsen, senior oil analyst at consultancy Global Risk Management.

More news: Early weekend storm threat and time line

Like this: