Oil Surges Above $75 in NY as Supply Outages Outpace OPEC

Oil Surges Above $75 in NY as Supply Outages Outpace OPEC

Futures in NY were 0.3 per cent higher following the US Independence Day holiday, remaining near the highest since 2014.

Trump again accused the OPEC of driving fuel prices higher on Wednesday, and urged U.S. allies such as Saudi Arabia, to pump more if they wanted Washington to continue protecting them against their top foe, Iran.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $74.60 a barrel at 0044 GMT, up 46 cents, or 0.6 percent, from their last settlement.

A USA government report also weighed on prices this week, by crude stockpiles rose 1.3 million barrels and showing unexpectedly ample supplies after analysts had forecast a decline.

The war of words over oil prices continues between US President Donald Trump and Iran, and the latest salvo from Iran is for Trump to stop tweeting.

Brent was being pressured by expectations for higher Saudi and Russian Federation production, which impacts Europe and Asia, where Brent is the benchmark, more than markets dominated by USA crude prices. Trump had already alerted OPEC that it could not keep inflating prices artificially.

"With contentious midterm United States elections looming, the President continues to strong-arm Saudi Arabia to increase oil supplies which, at least for now, is containing price action below WTI $75 per barrel", said Stephen Innes, Head of Trading for Asia/Pacific at futures brokerage OANDA.

OPEC together with a group of non-OPEC producers led by Russian Federation started to withhold output in 2017 to prop up the market.

However, the market response was minimal given the continuing threat of United States sanctions against Iran and a reported threat by the Iranians to close the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and is an important shipping route for oil. Analysts however say that he cannot have both; the White House can either drive Iran's oil exports to zero, or it can have moderate U.S. gasoline prices, but it probably cannot have both.

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Renewed U.S. sanctions on Iranian oil appear set to tighten supplies further.

Last month, members of the Organization of the Petroleum Exporting Countries cartel agreed to pump 1 million barrels more crude oil daily, a move that should help contain the recent rise in global energy prices.

The price went up when OPEC chose to cut production previous year.

But strong personal relationships between the leaders and agreement on the overall deal obscure disagreement on some key details, not least the desirable level for oil prices.

A Saudi Arabian supply surge was to be expected.

An imminent shift in global oil trade flows was also affecting prices.

Yesterday, the deputy commander of the Sarollah Revolutionary Guards in Tehran warned that any attempt to undermine Iran's oil exports will lead to the closing of the Strait of Hormuz-a narrow waterway vital to oil distribution in the Persian Gulf region.

Oil prices have been buoyed by tightening supplies this year but there are signs demand may now be easing.

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