Oil Price Continues Rise As Brent Crude Hits $86 Per Barrel

Paul Lawry  Flickr

Paul Lawry Flickr

"Crude oil prices drifted lower (on Thursday) on combination of rising oil production in Saudi Arabia and Russian Federation and a build-up of inventories in the U.S. That said, prices remained resilient as supply worries persist amid looming Iranian sanctions", ANZ bank said on Friday.

In futures trading at Multi Commodity Exchange, crude oil for delivery in November was trading Rs 8, or 0.14 per cent lower, at Rs 5,648 per barrel in 2,341 lots.

The worldwide oil benchmark, Brent crude, on Wednesday, jumped to $86 per barrel with traders weighing falls in Iranian exports over pending United States' sanctions.

"Admittedly, supply-side concerns are pushing the oil price higher, but there are now clear warning signs on the demand-side, which could yet send prices lower", said Capital Economics in a note to clients.

In other energy dealings Thursday, November gasoline RBX8, +0.44% fell almost 1.8% to $2.10 a gallon and November heating oil HOX8, +0.27% settled at $2.40 a gallon, down 1.5%.

There is a risk that oil prices could hit $100 a barrel soon because a lot of uncertainties now exist in a very nervous and emotional market, Russia's Energy Minister Alexander Novak told Russian radio station Business FM in an interview on Thursday.

Aggressive implementation of USA sanctions on Iran has left refiners and traders concerned about the future availability of crude and questioning whether OPEC will still have enough spare capacity to offset any other losses.

Only the strength of the dollar against other currencies is masking how high prices have become in oil-consuming countries outside the United States. The contract is on course for a gain of around 2.5 percent for the week. Analysts doubt if Saudi Arabia can produce much above current near-record levels. The global benchmark crude traded at a $9.75 premium to WTI for the same month. Trump in July tweeted without evidence that Saudi Arabia would increase its production "maybe up to 2,000,000 barrels" a day.

In the meantime, Korea's imports of Iranian crude oil remained at 58.2 million barrels, down 42 percent over the same period.

Iran's crude oil and condensate exports fell to 1.7 million b/d in September, a fall of nearly 700,000 b/d from May, according to Platts estimates.

Official weekly government data is due from the Energy Information Administration (EIA) on Wednesday. Meanwhile, the industry-funded American Petroleum Institute was said to report stockpiles rose by 907,000 barrels last week.

-With assistance from Stephen Stapczynski.

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