Oil edges up on looming Iran sanctions, but U.S.-China trade war caps gains

Monday,   22-Oct-2018   09:11 AM (IST)

Oil prices edged up on Monday, as markets were expected to tighten once U.S. sanctions against Iran's crude exports are implemented next month. Front-month Brent crude oil futures were trading at $79.88 a barrel at 0248 GMT, 10 cents above their last close. U.S. West Texas Intermediate crude futures were at $69.31 a barrel, 19 cents above their last settlement. Also in the United States, Intercontinental Exchange said its new Permian West Texas Intermediate crude futures contract deliverable in Houston, Texas, will begin trading on Monday. The main price driver in Asia on Monday was the looming start of U.S. sanctions against Iran's oil exports, which will start on November 4. While the Organization of the Petroleum Exporting Countries (OPEC) agreed in June to boost supply to make up for expected Iran disruptions, an internal document reviewed by Reuters suggested that OPEC is struggling to add barrels to the market as an increase in Saudi Arabian supply was offset by declines in Iran, Venezuela and Angola. Fatih Birol, executive director of the International Energy Agency (IEA), said on Monday that other producers may struggle to fully make up for the expected fall in Iranian supply, and that coupled with strong demand, oil prices could rise further. Traders said major oil consumers were stockpiling in anticipation of more disruptions. There were also some signs of rising output, especially in North America. U.S. drillers added four oil rigs in the week to Oct. 19, bringing the total count to 873, Baker Hughes energy services firm said on Friday, raising the rig count to the highest level since March 2015. The U.S. rig count is an early indicator of future output. With activity rising again after months of stagnation, U.S. crude production is also expected to continue to rise.