Oil prices rise amid global supply concerns, U.S.-China trade talks
Oil prices rose on Monday, buoyed by hopes of progress in U.S.-China trade talks and supported by challenges to supply facing major exporters.
According to Reuters, U.S. West Texas Intermediate (WTI) crude was at $53.33, up 43 cents or 0.79 per cent.
Brent crude rose 28 cents or 0.48 per cent to $58.74 a barrel by 1215 GMT.
Both futures contracts ended last week with a more than five per cent decline after dismal manufacturing data from the United States and China, with the trade row between the world’s top economies undermining global economic prospects.
U.S. and Chinese officials meet later this week in Washington on Oct. 10-11 in a fresh effort to work out a deal, which U.S. President Donald Trump said his administration had a “very good chance” of achieving.
On the supply side, deadly anti-government unrest has gripped Iraq, the second-largest producer among the Organization of the Petroleum Exporting Countries.
Iraq’s oil exports of 3.43 million barrels per day (bpd) from Basra terminals could be disrupted if instability lasts for weeks, Ayham Kamel, Eurasia Group’s practice head for Middle East and North Africa, said in a note.
“Any oil production disruption would occur at a time when Saudi Arabia has lost a significant part of its energy system redundancies (spare capacity),” he told Reuters.
The major Buzzard oil field in the British North Sea was also shut for pipe repair work, China’s CNOOC said on Friday, while Shell maintains force majeure remains on exports of Bonny Light crude in Nigeria.
Still, Total’s giant Johan Sverdrup offshore oil field started up in the North Sea this month with a goal of achieving 440,000 bpd at peak production.
Libya’s National Oil Corporation (NOC) said on Sunday it would close the Faregh oil field at Zueitina port for scheduled maintenance from Monday until Oct. 14.
But analysts said the resumption in Saudi Arabian production after Sept. 14 attacks could undermine a price rally.
“The Saudi attacks have quickly been forgotten about and global growth is back to being the main driver of oil markets,” Craig Erlam, senior market analyst at OANDA, told Reuters. “Such complacency could come back to bite oil traders as another aggressive spike will likely accompany any further escalation in the region.”
Despite Monday’s gains, Brent is still down more than 20 per cent from the 2019 peak of $75.60 a barrel recorded in April.
But OPEC Secretary-General Mohammed Barkindo said it was still too early for the group to discuss deeper oil output cuts to support prices, Russian news agency TASS reported on Monday.