SINGAPORE (Reuters) – Oil prices held Tuesday, with US fuel markets tightening, though the introduction of crude oil from the US strategic reserve somewhat offset an expected decline in supply due to forthcoming sanctions against Iran.
FILE PHOTO: An oil pump is seen at sunset outside of Vaudoy-en-Brie, near Paris, France April 23, 2018. REUTERS / Christian Hartmann / File Photo
The US futures CLc1 for the United States of West Texas Intermediate (WTI) rose by 30 cents or 0.45 percent, at 0651 GMT, by $ 66.73 per barrel. The contract expires on Tuesday.
Traders said that American markets would be boosted in the coming months by a tightening outlook for fuel markets.
Stocks in the United States for refined products such as diesel and fuel oil for this time of year are the lowest in four years.
This happens just before the peak period for these fuels, with diesel needed for tractors to harvest crops and the arrival of colder weather during the autumn of the northern hemisphere, which increases the consumption of fuel oil.
Outside the United States, the markets focused on US sanctions against Iran, which will attack its oil sector from November.
International Brent crude oil futures fell by 9 cents, at $ 72.12 per barrel.
Washington on Monday offered 11 million barrels of high-sulfur or acidic crude oil from its Strategic Petroleum Reserve (SPR) for delivery from October 1 to November 30. The oil released could compensate for the expected shortcomings of US sanctions against Iran.
Because of the sanctions, the French bank BNP Paribas said that the oil production of the Organization of the Oil-exporting Countries (OPEC), of which Iran is a member, is expected to decrease from an average of 32.1 million barrels per day (BPD) in 2018 to 31 , 7 million bpd in 2019.
Nevertheless, traders said that overall market sentiment was cautious because of concerns about demand prospects amid the trade dispute between the United States and China.
This week there must be a Chinese trade delegation in Washington to resolve the dispute, but US President Donald Trump told Reuters in an interview on Monday that he does not expect much progress and that solving the trade dispute with China "will take time" .
AMPLE OIL, DESPITE IRAN
The impact of the Iranian sanctions is not yet clear.
While most energy companies in Europe are likely to be in line with Washington, China has indicated that Iran continues to buy oil.
The supply restriction in Iran can also be more than compensated by production increases outside the OPEC.
BNP Paribas said that non-OPEC output is likely to grow by 2 million bpd in 2018 and 1.9 million bpd next year.
"Depending on when the constraints of the pipeline infrastructure in the United States are lifted, the growth of the non-OPEC offering may turn out to be higher by the end of 2019 than currently assumed," said the bank.
The search for new oil has increased worldwide in the last two years, with the global number of counts from 1,013 at the end of July 2016 to 1,664 in August 2018, according to the energy services company Baker Hughes.
The biggest increase was in North America, where the number of counts of the last two years increased from 491 to 1,057.
How the prices develop depends on the demand.
"We are seeing global demand for oil rising by 1.4 million barrels per day, both in 2018 and in 2019," said BNP Paribas, implying that global markets are likely to remain adequately supplied.
Reporting by Henning Gloystein; adaptation by Richard Pullin and Christian Schmollinger