Investing.com – Crude oil prices settled higher in a choppy session Tuesday as traders weighed the prospect of fresh supply flooding the market against an ongoing disruption in crude output.
In the New York Mercantile Exchange crude futures for August delivery rose 20 cents to settle at $74.14 a barrel, while on London's Intercontinental Exchange, Brent climbed 0.65% to trade at $77.78 a barrel. WTI crude oil prices had hit their highest level since November 2014, rising above $75 a barrel, before paring gains.
In what was a rocky session, crude oil prices recovered from a mid-morning slip, but settled well below intraday highs after Saudi Arabia agreed to U.S. President Donald Trump's demand to pump more oil to stabilize the market.
"The kingdom is prepared to utilize its spare production capacity when necessary to deal with any future changes in the levels of supply and demand," a cabinet statement said, following a meeting chaired by King Salman.
This comes just days after President Donald Trump said in a tweet that he had requested King Salman bin Abdulaziz to raise output by as much as 2 million barrels per day.
The fall to session lows, however, attracted a fresh wave of buyers as traders continued to bet on the prospect of a shortage in global supplies supporting oil prices as unexpected disruptions in Canada, Libya and Venezuela have weighed on supply.
Some analysts questioned Saudi's ability to offset the risk of global crude supply shortage ahead of upcoming U.S. sanctions on Iran, OPEC's third-largest oil exporter.
Morgan Stanley (NYSE:MS) said it expects a crude deficit of 600,000 barrels a day over the next six months after upwardly revising its estimates on the loss of Iranian crude.
The bank anticipates the impact of U.S. sanctions on Iran's exports would cut shipments by 1.1 million barrels per day by year end. That is higher than its estimates for a 700,000-barrels-per-day decline through 2019.