Oil jumps as market tightens, more gains seen

Lloyd Doyle
September 24, 2018

Brent crude LCOc1 hit its highest since November 2014 at $81.39 per barrel, up $2.59 or 3.3 percent, before easing to $80.86 by 1:09 p.m. EDT (1705 GMT).

OPEC's shale comments followed a weekend meeting in which the world's top oil producing nations declined a wide-scale production boost, despite a call from President Trump last week in which he called OPEC an "monopoly" via a tweet.

"And we expect to go on exporting", Hossein Kazempour Ardebili said after the meeting of the Joint Ministerial Monitoring Committee (JMMC) of members from the Organization of the Petroleum Exporting Countries (OPEC) non-cartel oil producers.

New York's main contract, West Texas Intermediate (WTI) or light sweet crude for delivery in November, added $1.52 to $72.30 after earlier striking a two-month pinnacle.

Oil leaped after the world's top producers made a decision to maintain output during a meeting in Algeria at the weekend.

Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as the market braces for the loss of Iranian supplies because of United States sanctions.

Those fears have sent crude oil prices higher, with commodity traders Trafigura and Mercuria predicting prices could rise to more than $100 a barrel by early next year.

The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) is being convened in Algiers with the oil and energy minister of OPEC and non-OPEC countries including Russian Federation.

"Our plan is to meet demand", said Saudi Energy Minister Khalid Al-Falih. WTI crude, the benchmark North American contract, was up 1.7 per cent at $72 USA a barrel.

Saudi Arabia signaled the kingdom is in no rush to bring oil prices down from current levels. -China trade war and supply, especially from the US, was seen sufficient in the next 12 months, said Janet Kong, BP Plc's head of trading in Asia.

In August, OPEC and its allies cut production by 600,000 bpd more than their pact required, mainly as a result of falling output in Iran as customers in Europe and Asia reduced purchases ahead of the USA sanctions deadline. However, Saudi Arabia and Russian Federation now say they have no more capacity.

However, the word from traders and refiners at the industry's annual gathering in Singapore this week is that the market starting to look short of necessary barrels, and prices are likely to head higher.

"Balances are precarious and the lack of spare capacity could see crude pricing well above US$90 or even US$100, should all of the potential risk in the market materialize", analysts including Ed Morse said in the note.

Other reports by Iphone Fresh

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