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Oil prices are hanging tight as the market remains fundamentally optimistic.
Oil prices are hanging tight as the market remains fundamentally optimistic.

Brent, WTI Prices Slip on Rising US Rig Count

Brent, WTI Prices Slip on Rising US Rig Count

Oil prices dipped on Monday after a rising rig count in the United States pointed to higher production there, but markets held near their highest in over three years and remained set for a second straight month of gains.
Oil prices were supported by supply concerns amid prospects that the United States could reimpose sanctions on Iran, while OPEC-led producers continue to withhold output, CNBC reported.
Brent crude futures, the international benchmark, had dipped 50 cents, or 0.7%, to $74.14 a barrel. Prices climbed as high as $75.47 last week, levels not seen since November 2014.
US West Texas Intermediate crude futures were at $67.82 a barrel, down 28 cents, or about 0.4%, from their last settlement.
“Oil prices are hanging tight as the market remains fundamentally optimistic with declining stockpile levels and on prospective sanctions on Iran,” Benjamin Lu, commodities analyst at Singapore-based broker Phillip Futures, said in a note.
US drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest level since March 2015, General Electric’s Baker Hughes energy services firm said.
Crude production in the United States C-OUT-T-EIA has soared more than 25% since mid-2016 to a record 10.59 million barrels per day. Only Russia currently produces more, at around 11 million bpd.
Meanwhile, Brent prices have gained nearly 6% this month, buoyed by expectations the United States will renew sanctions against Iran.
US President Donald Trump has until May 12 to decide whether to restore the sanctions on Iran that were lifted after an agreement over its disputed nuclear program.
However, according to Sukrit Vijayakar, director of energy consultancy Trifecta, “It is only Trump who wants to back out of the deal, but he wants to back out of so many deals ... If you keep saying about backing out, you lose credibility as a state. Everyone is feeling the pinch of OPEC cuts anyway.”
Reimposed sanctions on Iran, OPEC’s third-largest producer, would probably result in a reduction of Iranian oil exports, tightening global supplies even more.
Further backing oil prices are declining output in Venezuela, OPEC’s biggest producer in Latin America and Angola, Africa’s second-largest exporter.

 

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