Oil Rises Amid Doubts Over Supply, Weaker $

Oil Rises Amid Doubts Over Supply, Weaker $

Oil prices rose on Tuesday, boosted by a weaker dollar and by expectations that demand could grow quickly enough to match supply this year, although concern over a potential battle for market share limited gains.

Front-month Brent crude futures were up by 59 cents to $45.04 a barrel. US crude futures rose 54 cents to $43.18 a barrel, Reuters reported. Helping prices were a weaker dollar and a rush of new investment into crude futures. The oil price has risen by nearly 14% in April, putting it on track for its largest monthly gain in a year. However, some analysts warned it was too early to call an end to the crude glut, as Saudi Arabia and Iran could ramp up output further in a race for customers.

“The biggest bear risk to the oil market right now is that Iran’s ramp-up accelerates and then that Saudi Arabia does the same,” Citi said in a note to clients.

“If anyone had a doubt about Saudi Aramco’s ability to use its logistical system and spot sales to increase market share, its recent 730,000-barrel sale of a cargo to a Chinese teapot refiner in Shandong should lay any doubts to rest.”

The cargo will be lifted in June from Aramco’s storage in Japan’s Okinawa prefecture and shipped to China’s eastern province of Shandong. Citi said it was likely that Saudi Arabia was targeting 500,000 barrels per day in new sales to bring its production up to at least 11 million bpd. BMI said it expected Saudi output to average 10.3 million bpd, up from a previous estimate of 10.2 million bpd. Iran wants to return to its pre-sanctions production level of 4 million bpd.

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