Oil Ticks Up Amid Supply Risks

  • Oil Ticks Up Amid Supply Risks

Oil Ticks Up Amid Supply Risks

Liberty Chairman & CEO Chris Wright says the Iran sanctions going into effect on Tuesday could have an impact on oil.

Benchmark Brent crude oil was up 10 cents at $72.91 a barrel by 0930 GMT.

Opec has revised down its forecast oil demand growth by 20,000 barrels a day from last month's report, to 1.64 million barrels a day this year.

Market participants awaited industry data on Tuesday from the American Petroleum Institute (API) that analysts expect will show USA crude and gasoline inventories fell last week.

Turkey's financial crisis has raised the risk of contagion throughout emerging economies, dragging down South Africa's rand, Argentina and Mexico's pesos and the Russian rouble.

Signs of slowing economic growth and lower fuel demand increases, especially in Asia's large emerging markets are weighing on the oil markets.

OPEC's July output is 270,000 bpd more than OPEC expects the demand for its oil to average next year, suggesting a small surplus in the market should OPEC keep pumping the same amount and other things remain equal.

Brent crude has fallen back to about $72 a barrel as the questions over demand have offset concerns over supply disruptions, such as USA sanctions on Iran, which had helped to propel the global oil benchmark to highs of $80 a barrel in May.

Hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending August 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.

The United States has started implementing new sanctions against Iran, which from November will also target the country's petroleum sector.

But output from non-OPEC countries, particularly the United States, is rising quickly, limiting demand for OPEC oil.

That was the highest level of drilling activity since March 2015.

"Oil prices are on the rebound as bulls take heart from an unexpected dip in Saudi oil output and the lingering Iranian wildcard", said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

Oil production from the Organisation of Petroleum Exporting Countries (OPEC) rose in July, despite supply shortfalls from Libya, Iran and Saudi Arabia.