Published: Wed, October 03, 2018
Money | By Armando Alvarado

Donald Trump Saudi king Salman bin Abdulaziz Al Saud discuss oil supply

Donald Trump Saudi king Salman bin Abdulaziz Al Saud discuss oil supply

Oil futures extended their rally on Monday, hitting their highest levels since November 2014, as US sanctions on Iran come into force and a North American trade deal fosters growth.

West Texas Intermediate for November delivery rose 4 cents to $75.34 a barrel on the New York Mercantile Exchange at 10:27 London.

Gasoline pump prices are on the rise in the U.S. The national average gas price was $2.875 per gallon on Friday, according to AAA, up 1.4 percent in the past month and 11.7 percent higher than a year ago.

The most-active December Brent crude futures contract LCOv1 settled up 59 cents at $81.38 a barrel, below the session high of $81.90 but still within sight of Tuesday's four-year high of $82.55.

Futures rose as much as 0.4 percent in NY after closing Monday at the highest since November 2014.

Brent has risen by more than 20 percent from its most recent lows in August.

This week, Trump again said he wasn't happy with OPEC, Middle East nations and oil prices, asserting that the producer group was causing prices to rise while benefiting from protection of the USA military.

Amazon Makes a Big Move on Minimum Wage
Neil Saunders, managing director of the consultancy GlobalData Retail, said that the move could help Amazon recruit workers. Amazon said its public policy team will start pushing for an increase in the federal minimum wage of $7.25 per hour.

That, analysts said, bodes well for overall demand for crude oil to keep increasing, driven by emerging markets and continued growth in the global economy.

Sentiments picked up after the U.S. and Canada reached a new deal to renew the North American Free Trade Agreement (NAFTA), saving a $1.2 trillion per year open-trade zone that had been on the verge of collapse.

USA sanctions are due to begin on November 4, and analysts are seeing a potential shortage of spare production capacity in the short-term, which might prompt huge storage drawdowns.

Brent was pushed up by the looming sanctions against Iran, which will start targeting its oil sector from November 4. OPEC itself trimmed its forecast for 2019 global oil demand growth, emphasizing the downside risk.

Trump has also reportedly discussed oil supplies and prices in a phone call with the king of Saudi Arabia on Sept. 29 ("Trump calls Saudi's King to discuss oil supplies", Reuters, Sept. 29). World oil prices are moving more on pronouncements and statements by the USA and Iran than by what exactly is dictated by demand. Bloomberg reports that India has no plans to purchase Iran's oil starting in November with South Korea and Japan pledging the same. China's Sinopec said it halved loadings of Iranian oil in September.

"Even if they (Saudi Arabia) wanted to bend to President Trump's wishes, how much spare capacity does the kingdom have?" said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

Like this: