Black Friday Sale! Save huge on InvestingProGet up to 60% off

Oil prices set for sixth week of gains, India sounds alarm

Published 05/18/2018, 05:52 AM
© Reuters. FILE PHOTO: General view of the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz
BARC
-
SHEL
-
LCO
-

By Ahmad Ghaddar

LONDON (Reuters) - Brent oil prices rose on Friday and were set for a sixth straight week of gains, boosted by strong demand, looming sanctions on Iran, plummeting Venezuelan production and Nigerian disruptions, as Saudi Arabia moved to assuage supply concerns.

Brent crude futures (LCOc1) were at $79.69 a barrel at 0913 GMT, up 39 cents. The international benchmark broke through $80 for the first time since November 2014 on Thursday.

U.S. West Texas Intermediate crude futures were at $71.63 a barrel, up 14 cents and set for a third straight week of increase.

British bank Barclays (LON:BARC) said it expected average prices of $70 per barrel for Brent this year and $65 a barrel for 2019, up from estimates of $63 and $60 previously.

"Since last month, Venezuela's production decline, Trump's Iran sanctions decision, a new disruption in Nigeria, and anecdotal evidence from a new round of producer earnings require a price forecast revision," the bank said.

Rising prices have already raised the alarm among big oil-consuming countries.

OPEC kingpin Saudi Arabia said on Thursday it would make sure the world is adequately supplied with oil just as major consumer India expressed frustration with rising prices.

Saudi Energy Minister Khalid al-Falih called India's Petroleum Minister Dharmendra Pradhan to assure him that supporting global economic growth was "one of the kingdom's key goals", the Saudi ministry said.

Crude prices have received broad support from voluntary supply cuts led by the Organization of the Petroleum Exporting Countries.

The International Energy Agency said oil inventories in the developed world had already dipped below the five-year average, a measure targeted by OPEC and its allies.

Beyond OPEC's cuts, strong demand, falling output from Venezuela and a U.S. announcement this month that it would renew sanctions against OPEC member Iran have helped push up Brent by 20 percent since the start of the year.

U.S. investment bank Jefferies said sanctions against Iran could remove more than 1 million barrels per day (bpd) from the market.

Barclays said output from Venezuela could fall below 1 million bpd. The country, also an OPEC member, produced around 1.5 million bpd in April.

In Nigeria, Shell (L:RDSa) declared force majeure on Thursday on loadings of Bonny Light crude. Exports of the grade were expected to run at nearly 200,000 bpd in June. Nigeria's Forcados stream was also experiencing delays due to a pipeline leak.

To view a graphic on Asia's oil thirst being expensive, click: https://reut.rs/2wLchCf

© Reuters. FILE PHOTO: General view of the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz

To view a graphic on Russia vs Saudi vs U.S. oil production, click: https://reut.rs/2rNTili

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.