Crude-oil benchmarks finished higher Monday, with Brent crude posting a sizable gain as traders fretted over production disruptions in Libya and Venezuela and expectations for big declines in Iranian exports.
August West Texas Intermediate crude CLQ8, +0.37% the U.S. benchmark, climbed by a nickel, or less than 0.1%, to settle at $73.85 a barrel on the New York Mercantile Exchange, after trading as low as $72.99. WTI prices lost 0.5% last week.
September Brent crude LCOU8, +1.47% added 96 cents, or 1.2%, to $78.07 a barrel on the ICE Futures Europe exchange, after closing on Friday with a weekly retreat of 2.7%.
Longstanding, and expected, outages to supplies in Libya, Venezuela and Iran have helped lift crude prices, which had been on an uptrend amid efforts by the Organization of the Petroleum Exporting Countries and its allies to balance supply and demand.
During a meeting last month, OPEC agreed to lift output globally by 1 million barrels a day to help counteract lost barrels from Venezuela and Iran, where the U.S. has pulled out of a nuclear agreement and threatened to reimpose sanctions targeting Tehran’s oil exports.
Some countries, however, have voiced support for the Iran nuclear deal, easing concerns over the potential for lower exports from Iran. Top diplomats from Germany, Britain, France, Russia and China reaffirmed their commitment to the 2015 nuclear pact, according to a report from the Associated Press, citing comments from the European Union foreign policy chief.
Market participants also have been attentive to signs of rising supplies in the U.S., with weekly data on Friday from Baker Hughes BHGE, +2.04% showing that the number of active U.S. rigs drilling for oil rose by 5 to 863, marking the first such rise in the past three weeks.
U.S. oil prices on Friday finished with a healthy gain Friday, despite the data, which offers
a signal of rising future output in the U.S.,” but “the pace of increase will not be able to compensate losses from other sources like Iran and Venezuela,” said analysts at ICICI Bank, in a daily note. “Even if OPEC and allies increase output, there will be limited spare capacity, which will increase responsiveness of oil to even small supply disruptions.”
Meanwhile, President Donald Trump, in a series of recent tweets, has called for Saudi Arabian officials, which represent the most influential faction of OPEC, to help pump more crude and lower prices.
“Trump’s tweets on pushing OPEC to increase production proved to have limited impact on dragging prices so far,” wrote Hussein Sayed, chief market strategist at FXTM, in a Monday note.
“Backwardation continued to steepen on the Brent and WTI futures curves, reflecting tightness in oil markets. All eyes will be on OPEC’s production this month, particularly from Saudi Arabia, after Trump urged the organization to act to bring prices down,” he wrote. Backwardation refers to a situation where prices for oil for delivery in the near future are higher than those for later deliveries.
Traders have also watched escalating trade tensions between China and the U.S., and their potential impact on oil demand, with the two largest economies in the world implementing tit-for-tat tariffs and threatening further action.
Back on Nymex, prices for petroleum products settled higher, with August gasoline RBQ8, +2.14% rising 1.9% to $2.149 a gallon and August heating oil HOQ8, +1.48% up 1.3% at $2.196 a gallon. August natural gas NGQ18, -1.08% shed nearly 1.1% to settle at $2.828 per million British thermal units.
This week will see the release of a monthly short-term energy outlook report from the EIA on Tuesday. Monthly oil reports are also due from OPEC Wednesday and from the International Energy Agency Thursday.