Brent holds close to almost four-year highs, while US crude loses ground

Tokyo — Oil benchmark Brent traded little changed on Wednesday after rising to its highest in nearly four years in the previous session while US crude futures fell as US officials tried to assure that the market would be well-supplied before sanctions are re-imposed on producer Iran.

Brent crude futures were down 4c at $81.83 a barrel by 3.42am GMT, after gaining nearly 1% the previous session. Brent rose on Tuesday to its highest since November 2014 at $82.55 a barrel.

US crude futures were down 13c, or 0.2%, at $72.15 a barrel. They rose 0.3% on Tuesday to close at their highest level since July 11.

The US will apply sanctions to halt oil exports from Iran, the third-largest producer in Opec, starting on November 4. The pending loss of Iranian supply has been a major factor in the recent surge in crude prices.

US officials, including President Donald Trump, are trying to assure consumers and investors that enough supply will remain in the oil market while requesting producers raise their output.

“We will ensure prior to the re-imposition of our sanctions that we have a well supplied oil market,” Washington’s special envoy for Iran, Brian Hook, told a news conference at the UN General Assembly on Tuesday evening.

In an earlier speech at the UN, Trump reiterated calls on Opec to pump more oil and stop raising prices. He also accused Iran of sowing chaos and promised further sanctions on the country.

“Trader focus remains on the Brent contract trading at four-year highs,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The impending sanction of Iranian output not only removes around 1-million barrels a day, but the potential supply response of a further 2-million barrels a day,” he said.

The so-called Opec-plus group, which includes other oil producers, including the world’s biggest Russia, as well as Oman and Kazakhstan, met at the weekend to discuss a possible increase in crude output, but the group did not see the need to add new output as the market is well-supplied currently .

Oil prices, however, have trended higher amid concerns about supply. Brent is on course for its fifth consecutive quarterly increase, the longest such stretch for the global benchmark since early 2007, when a six-quarter run led to a record high of $147.50 a barrel.

Meanwhile, in the US, the world’s biggest oil user, an industry report on Tuesday showed crude stockpiles unexpectedly climbed last week.

Crude inventories rose by 2.9-million barrels in the week to September 21 to 400-million, compared with analyst expectations for a decrease of 1.3-million barrels, the American Petroleum Institute said.

Official figures on stockpiles and refinery runs from the US department of energy’s Energy Information Administration are due at 2.30pm GMT on Wednesday.

Reuters

Source: businesslive.co.za