Oil traders prepare for $100 per barrel price tag

02 October, 2018, 21:52 | Author: Eric Barnett
  • The potential supply shortage is a a reversal of the glut seen in the oil market between 2015 to 2017

On Sunday, Trudeau said it was a "a good day for Canada", while on Monday, Trump called the deal "wonderful" and a "historic transaction".

Futures rose as much as 0.4 percent in NY after closing Monday at the highest since November 2014. U.S. West Texas Intermediate crude futures were at 73.57 dollars a barrel.

LONDON-Oil prices were mixed Tuesday morning, even as crude prices held to near four-year highs amid growing signs of shrinking global supply.

Meanwhile, the 24-year-old North American Free Trade Agreement will now be superseded by the U.S. -Mexico-Canada Agreement, covering a region that trades more than $1 trillion annually.

Kuwait has all but stopped shipping crude to the USA for the first time since the aftermath of Saddam Hussein's invasion in 1990, eroding an economic link between Washington and the Arab petro-monarchy. That was not far off the $85.45 peak reached in the previous session, the highest since November 2014. Open interest in call options at $90 a barrel has risen by almost 12,000 lots in the last week to 38,000 lots, or 38 million barrels.

Higher oil prices and a strong US dollar could hit demand growth next year, analysts said. Still, oil majors like BP Plc and Total SA cautioned that such a rally may not be sustainable as escalating trade tensions between the US and China may weaken demand.


Prices have also been buoyed by looming US sanctions against Iran's oil industry, which at its peak this year supplied almost 3 percent of the world's daily consumption.

Several major buyers in India and China have signaled they will cut purchases of Iranian oil.

"If Chinese refiners do comply with US sanctions more fully than expected, then the market balance is likely to tighten even more aggressively", Emirates NBD analyst Edward Bell wrote in a note.

The call comes days after the US president criticised OPEC for high oil prices and called again on the exporting group to boost crude output to cool the market ahead of midterm elections in November for US Congress members.

"Saudi Arabia are signaling that they do not have a lot of prompt spare capacity available, or that they don't have the will to really use it on a proactive basis", Petromatrix strategist Olivier Jakob said. As concerns over a global crunch due to the loss of Iranian oil mount, President Donald Trump and King Salman bin Abdulaziz of Saudi Arabia discussed efforts to maintain supplies.

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