Crude Oil Approaching 7-Month High

Crude Oil

Crude Oil

This is months after of range-bound trading during which OPEC-led supply cuts buoyed crude prices but rising US output capped markets.

The price of Brent crude rose above US$58 a barrel on the Intercontinental, or ICE, exchange on Monday signaling an approach to the year-high level of US$59, reached in September. WTI crude oil continues to trade higher on Tuesday morning, gained 0.50% to trade at $52.12.

The escalating fighting in Iraq has spooked markets as it adds to rising tensions between the United States and Iran.

Tension between the United States and Iran is also rising, increasing the global risk premium for oil.

OPEC and other producers, including Russian Federation, agreed to cut their production by around 1.8 million barrels a day until next March to drain a global oversupply and prop up prices.

The report comes at a time when the price of crude oil saw an increase following the instability in the Northern Iraq, where Iraqi official forces are seeing a tensed confrontation with Kurdish forces.

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"It remains to be seen whether the Kurds, after withdrawing from the region they claim to be entitled to, will allow crude oil to be transported by pipeline across their territory to the Turkish Mediterranean port of Ceyhan", said analysts at Commerzbank.

"In the case of Kurdistan, the 500, 000 bpd Kirkuk oil field cluster is at risk with initial reports that 350, 000 bpd has shut in although this remains unclear", Goldman Sachs said on Tuesday. U.S. President Donald Trump on October 13 refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide on further action against Tehran.

On the issue of balance, Total CEO Patrick Pouyanne said Wednesday at an oil and financial conference in London that the OPEC balancing effort was working well, as evidenced by the steady draw on global crude oil inventories. The Persian Gulf nation said it would support an extension of OPEC output cuts to the end of 2018 and insisted its production plans won't be disrupted by U.S. President Donald Trump's disavowal of the nuclear deal that's boosted its exports. The cuts are likely to be shared again by non-OPEC members led by top oil producer Russian Federation, which lessened output joining OPEC from January. Both contracts traded up almost 1 percent and down over 1 percent during the day.

US inventories fell by 7.13 MMbbl last week, the American Petroleum Institute was said to report.

"We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel respectively".

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