SINGAPORE (Reuters) – Oil prices rose on Monday as markets in the US tightened weeks ahead of Washington's plan to impose new sanctions on Iran. Large traders and banks expect rising prices of over $ 90 over the coming months.
A horizontal rig on a lease of Petersley Energy operates in the Permian Basin near Midland, Texas USA August 23, 2018. REUTERS / Nick Oxford
Brent Crude LCOc1 futures were trading at $ 79.82 a barrel at 0501 GMT, down $ 1.02 cents or 1.3 percent from their last close.
The West Texas Intermediate (WTI) Crude Oil CLc1 rose 82 cents, or 1.2 percent, to $ 71.60 a barrel.
The US C-STK-T-EIA commercial crude stockpiles are at their lowest level since early 2015. While the C-OUT-T-EIA output remains at around 11 million barrels per day (bpd), the most recent subdued drilling activity in the United States indicate a slowdown.
(For a graph on & # 39; oil drilling, production and storage levels & # 39; click on tmsnrt.rs/2OKP4nJ)
Commodity traders Trafigura and Mercuria said Monday that Brent could rise as high as $ 90 a barrel at Christmas and even over $ 100 at the beginning of 2019 as markets tighten as US sanctions on Iran begin in November.
JP Morgan estimates that sanctions could result in a loss of 1.5 million barrels a day, while Mercuria warned that up to 2 million barrels a day could be thrown out of the market.
The Middle East-dominated Organization of Petroleum Exporting Countries (OPEC) and Russia's top producer are discussing an increase in production to counteract the declining supply from Iran, although no decision has yet been released.
"We expect OPEC countries with free capacity, led by Saudi Arabia, to increase production, but will not fully offset the decline in Iranian barrels," said Edward Bell, commodities analyst, Emirates NBD Bank.
JP Morgan said in its latest market outlook released on Friday that Iran's sanctions are likely to push oil prices up to $ 90 a barrel over the coming months.
The bank said Brent and WTI expect an average of $ 85 and $ 76 a barrel over the next six months.
Indian refineries, struggling with high crude oil prices and record lows for the rupee against the dollar INR, are preparing to cut crude oil imports and instead use up commercial stocks.
(For a graph about & # 39; Crude Oil Price in Indian Rupee & # 39; click on tmsnrt.rs/2MZPyVE)
Reporting by Henning Gloystein; Editing by Richard Pullin