Oil climbs on Iraq unrest, while demand worries on hold
Oil prices rose on Tuesday as unrest in crude producers Iraq and Ecuador raised supply concerns and demand worries were put on hold as investors awaited the outcome of U.S.-China trade talks this week.
Brent crude rose 44 cents, or 0.8%, to $58.79 a barrel by 0652 GMT, while U.S. West Texas Intermediate (WTI) crude was at $53.17, up 42 cents, or 0.8%.
“We’re at the lower end of the trading range, some of those moves have taken some traders by surprise. That means the risks have flipped to the upside at least in the short term,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.
Investors are treading cautiously before U.S.-China talks that will take place in Washington on Thursday, although they are not expected to produce a comprehensive deal to end a trade war between the world’s top economies.
“Oil prices could be in for a sustained rally if the (U.S.) tariffs were to be put on hold indefinitely, which could see some of the braver at heart support dips,” Stephen Innes, Asia Pacific market strategist at AxiTrader, wrote in a note.
Protests in Iraq and Ecuador threatened to disrupt output from those two members of the Organization of the Petroleum Exporting Countries.
The death toll in Iraq, OPEC’s second largest producer, has climbed after a week of unrest.
The energy ministry in Ecuador, one of OPEC’s smallest producers which is quitting the group next year, said protests against austerity could reduce its oil output by 59,450 barrels per day (bpd).
In the United States, crude inventories probably grew for a fourth week while distillates and gasoline stocks likely fell last week, a preliminary Reuters poll showed on Monday.
Russia, the world’s second-largest oil producer, told Reuters it had joined the ranks of swing producers, saying it could lift output fairly quickly by 0.3-0.5 million bpd, or 0.3-0.5% of global supply, if Saudi Arabia’s production problems lasted longer than expected.
Production in Saudi Arabia, the world’s top oil exporter, was temporarily reduced by attacks on its facilities on Sept. 14. Riyadh said it had fully restored output after the attacks.
Source: Reuters (Reporting by Florence Tan; Editing by Richard Pullin and Edmund Blair)