Oil is poised for a third weekly gain as energy giants to Wall Street banks predict the return of $100 crude on fears over an impending supply crunch.
Futures in New York were set for a 2-percent advance this week, on course for the longest run of weekly increases since May. Oil and gas major Total SA Chief Executive Officer Patrick Pouyanne said a supply loss in Iran and declining output in Venezuela may help push prices back into levels last seen in 2014. Meanwhile, the US government dismissed speculation it will release emergency crude reserves to temper prices.
Oil has risen to near four-year highs after the Organization of the Petroleum Exporting Countries showed little sign of immediately boosting production despite President Donald Trump’s demand to lower prices. Concerns over tightening supplies are growing as more and more buyers of Iranian crude shun purchases from the Islamic Republic, with US sanctions set to take full effect in early November.
“Everyone’s worried about the tightness in supply at the moment and that’s continuing to push up prices,” Will Yun, Seoul-based commodities analyst at Hyundai Futures Corp., said by phone. “But volatility is coming as we’re still waiting for further response from the US.”
West Texas Intermediate for November delivery traded at $72.20 a barrel on the New York Mercantile Exchange, up 8 cents, at 9:06 a.m. in Singapore. The contract has climbed $1.42 this week. Total volume traded was about 69 percent below the 100-day average.
Brent for November was little changed at $81.72 on the ICE Futures Europe exchange. The contract rose 3.7 percent this week. The global benchmark traded at a $9.53 premium to WTI.
Oil also rose a day after the US Energy Secretary ruled out tapping the Strategic Petroleum Reserve, compounding concerns that sanctions on Iran will tighten markets.
“People are rolling the dice on whether oil will reach $100,” said Bob Yawger, director of the futures division at Mizuho Securities USA. “We’re getting close to an area where oil is overbought and we’ll probably see a bit of a pull-back.”
US crude is nearing four-year highs after Opec signaled it’s in no rush to boost production to counter losses from Iran, drawing repeated criticism from President Donald Trump. Top trading houses are predicting the return of $100 oil, last seen in 2014, while Bank of America Corp. and JPMorgan Chase & Co. have increased their price forecasts.
“Right now we’re trading more on fear than on fundamentals,”said Ashley Petersen, senior oil market analyst at Stratas Advisors. “Hopefully by the start of next year and the end of this quarter some of that fear will be worked out of the market.”
West Texas Intermediate crude for November delivery rose 55 cents to settle at $72.12 a barrel on the New York Mercantile Exchange. Total volume traded on Thursday was about 38 percent below the 100-day average.
Brent for November settlement rose 38 cents to close at $81.72 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $9.60 premium to WTI.
Releasing oil from the US strategic reserve to prevent a price spike would have “a fairly minor and short-term impact,” Perry said, adding that other producers can offset losses from Iran. Earlier this week, Trump accused Opec of “ripping off” the world after the group stopped short of promising specific extra volumes of crude.
The global oil market faces its tightest quarter in more than a decade in the final three months of this year as diminished Iranian supplies coincide with a resurgence in purchases by China, according to consultants Energy Aspects Ltd.