Oil up on disruption fears
LONDON, March 20, 2018 – Crude oil remained higher on Tuesday, as Middle-East tensions sparked concerns over potantial supply disruptions, although concerns over rising U.S. output levels persisted.
The U.S. West Texas Intermediate crude May contract was up $1.06 or about 1.71% at $67.28 a barrel by 10:00 a.m. ET (14:00 GMT), the highest since March 6.
Elsewhere, Brent oil for May delivery on the ICE Futures Exchange in London advanced $1.09 or about 1.65% to $67.16 a barrel, the highest since February 28.
Oil prices were boosted by news the U.S. could reimpose sanctions on Iran, while fresh tensions between Saudi Arabia and Iran sparked fears of supply disruptions in the region.
But gains were expected to remain capped ahead of the American Petroleum Institute’s weekly report on U.S. oil supplies, due later Tuesday.
The U.S. Energy Information Agency is set to release its weekly data on oil and gasoline stockpiles on Wednesday.
The commodity had come under pressure after Baker Hughes energy services firm said on Friday that the number of active U.S. oil rigs increased by four in the week to March 16, bringing the total count to 800.
High drilling activity has pushed U.S. crude oil production to rise to 10.38 million barrels per day (bpd), past top exporter Saudi Arabia.
Analysts and traders have warned that booming U.S. shale oil production could potentially derail the Organization of the Petroleum Exporting Countries’ efforts to rein in a global supply glut and support prices.
OPEC agreed in December to cut oil output by 1.8 million bpd until the end of 2018. The agreement was due to end in March 2018, having already been extended once.
Elsewhere, gasoline futures climbed 1.42% to $1.956 a gallon, while natural gas futures were up 0.11% at $2.665 per million British thermal units.