Oil jumps 3% to above $65 on growing Middle East tensions

Dianna Christensen
April 11, 2018

Brent crude futures LCOc1 were at $68.52 per barrel, down 13 cents, or 0.2 per cent.

Brent oil futures settled Tuesday at their highest in more than three years as tensions linked to Syria raised the potential for disruptions to Middle East crude output. Tracking the most-active futures contracts, the global benchmark marked its highest finish since December 1, 2014.

Oil prices extended gains on Tuesday, as the trade spat between the USA and China showed signs of getting settled without causing any harm to the global economy.

Those rosier forecasts from the U.S. government and the improved news-flow on the global trade front saw Brent futures for next month delivery rise 3.54% to $71.08 a barrel on the ICE, alongside a 3.54% move higher for WTI to $65.66 a barrel.

"If China was to impose counter tariffs on USA crude, it would become quickly very heavy for the US supply and demand picture, resulting in US crude oil price pressure that would have a negative impact on global oil prices", according to Petromatrix. But prices began to retrace losses Monday afternoon after American and Chinese officials moved to soften their rhetoric (http://www.marketwatch.com/story/trump-administration-dials-down-the-rhetoric-on-china-tariffs-2018-04-08) over the trade spat.

U.S. President Donald Trump promised a swift response to a suspected chemical attack in Syria.

Meanwhile, news that Saudi Arabia is aiming for an $80 oil price adds to bullish sentiment around the oil market, says Price Futures Group analyst Phil Flynn, and that "usually, what the Saudis want, the Saudis get".

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Oil prices are still showing a gain so far this year, thanks to healthy demand and by supply restraint led by the Organization of the Petroleum Exporting Countries, which started in 2017 to rein in oversupply and prop up prices.

Official data from the Energy Information Administration will be released today, amid forecasts for an oil-stock gain of around 0.2 million barrels. "We're taking a hit with the rest of the market".

"The EIA said that United States crude oil output is chiefly the function of price".

US WTI crude futures CLc1 were at $63.26 a barrel at 0031 GMT, down 16 cents, or 0.3 per cent, from their previous settlement.

The EIA's weekly petroleum supply data are due Wednesday. "However, oil market fundamentals are tightening and oil prices looks set to be squeezed higher as long as OPEC+ sticks to its cuts".

That will likely make the United States the world's biggest oil producer by 2019, surpassing Russian Federation which now pumps out nearly 11 million bpd.

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