SINGAPORE (Reuters) – Brent crude prices rose to its highest level since Monday 2014 on Monday, ahead of US sanctions on Iran, the third-largest producer of the Organization of Petroleum Exporting Countries (OPEC), which will launch next month.
FILE PHOTO: Pump lifters working in front of an oil rig in an oil field in Midland, Texas USA August 22, 2018. REUTERS / Nick Oxford / file photo
Benchmark Brent crude oil futures LCOc1 rose to $ 83.27 a barrel to hit $ 83.21 at 0339 GMT, an increase of 48 cents, or 0.6%, from last close.
The West Texas Intermediate (WTI) Crude Oil CLc1 rose 32 cents, or 0.4 percent, to $ 73.57 a barrel.
WTI prices were supported by a report on a stagnant US oil rig on Friday, indicating a slowdown in US C-OUT-T-EIA crude oil production, which is now in competition with top producers Russia and Saudi Arabia.
Brent was driven up by impending sanctions on Iran, which targets its oil sector from 4 November.
ANZ Bank said on Monday that "the market sees oil prices at $ 100 a barrel".
In a sign that the financial market is positioning itself for further price hikes, hedge funds increased their bullish bets on US crude during the week ending on September 25, data from the US Commodity Futures Trading Commission (CFTC) showed rising futures and options positions on Friday in New York and London from 3,728 contracts to 346,566 during the period.
Another sign of the impact that US sanctions on Iran will have on the market is China's Sinopec (600028.SS) said it halved cargoes of Iranian crude this month. China is the biggest buyer of Iranian oil.
"If Chinese refineries perform better than expected US sanctions, the market balance is likely to worsen even more," said Edward Bell, commodities analyst of Emirates NBD Bank, in a release published on Sunday.
US President Donald Trump called on Saudi King Salman on Saturday to discuss ways to maintain supply as Iran's exports suffer sanctions.
"Until OPEC offers a substantial supply, traders will eventually continue to work on the border," said Stephen Innes, Asia-Pacific Trade Director for Futures Brokerage Oanda in Singapore.
"Even if they (Saudi Arabia) wanted to bow to President Trump's wishes, how much free capacity does the kingdom have?" Asked Innes.
"We'll find out very soon, as about 1.5 million barrels (per day) of Iranian oil will go offline on November 4. If the market senses Saudi Arabia's capacity at 10.5 million barrels … Oil In fact, with the eye-catching price of $ 100 a barrel, prices will indeed rise at a more reasonable target, "said Innes.
(For a graph about US crude production, Rig Count, click on reut.rs/2IrBi7E)
In the face of rising oil prices, there is concern about their inflationary impact on demand growth, particularly in emerging Asia, where flagging currencies continue to increase high fuel import costs.
Add trade disputes between the United States and other major powers, notably China, and economic growth could be eroded by 2019.
China's manufacturing growth picked up in September as both external and domestic demand declined, as two polls on Sunday showed.
In Japan, corporate confidence among major manufacturers declined to their lowest level in nearly a year in nearly a year, as companies were hit by rising raw material costs and deteriorating global trading conditions.
(For a chart on & # 39; oil prices in different currencies & # 39; click on tmsnrt.rs/2OffFwp)
Reporting by Henning Gloystein; Arrangement by Joseph Radford and Christian Schmollinger