Oil price steady at four-year high as supply concerns remain

Oil price steady at four-year high as supply concerns remain

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.

Meanwhile, the US West Texas Intermediate (WTI) crude futures were also up by USD$1.66, or 2.3 percent, putting a hefty USD$74.91 per barrel price - the company's highest since July. Since mid-August, WTI has increased around 17 percent.

Brent for December settlement fell 37 cents to $84.61 a barrel on the London-based ICE Futures Europe exchange.

This would be the first highest trade deal hitting above the USD$85 per barrel threshold since November of 2014.

U.S. President Donald Trump spoke to Saudi King Salman on Saturday on ways to maintain sufficient supply.

Bijan Zanganeh said in an interview on state television that the Organization of the Petroleum Exporting Countries lacked the capacity to produce more oil to make up for the drop in Iranian sales.

"The market's very keen to figure out the size of impact from the Iranian supply disruptions and whether Saudi Arabia and Russian Federation are able to make up for the losses", Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone.

Oil in London extended gains after the longest quarterly rally in a decade as a slowdown in American drilling added to supply risks while the United States and Saudi Arabia discussed market stability. A survey by The Wall Street Journal indicates analysts, on average, are expecting that USA crude oil inventories rose by 1.3 million barrels last week. "At the same time, the U.S. -Mexico-Canada Agreement is also improving the overall sentiment for oil".

Trump, facing political pressure at home, has been calling on OPEC and American allies like Saudi Arabia to boost their production to lower global crude oil prices. China's Sinopec said it had halved loadings of Iranian oil in September. Analysts say prices likely will go higher as American sanctions on Iran resume in November.

Analysts cautioned that economic expansion might be weakening due to soaring crude prices and several currencies in emerging markets, including India's rupee and Indonesia's rupiah falling.

Head of trading for Asia-Pacific at futures brokerage in Singapore Stephen Innes said even if Saudi Arabia, wanted to grant Trump's wishes, it is uncertain how much spare capacity the kingdom has.

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