Oil slips after USA rig count rises; Iran concerns cap downside

02 May 2018, 01:34 | Andres Norman

Iran risk sends oil prices higher

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NEW YORK, April 30 (Reuters) - Oil rose slightly on Monday, bouncing off early losses after Israeli Prime Minister Benjamin Netanyahu said he would make an announcement later in the day about the nuclear deal with Iran.

While upside risks to the forecast include constraints to USA shale oil output, geopolitical risks in several producing countries, and concerns the United States may not waive sanctions against Iran, downside risks include weaker compliance with the oil producers' agreement to restrain output or outright termination of the accord, rising output from Libya and Nigeria, and a quicker-than-expected rise in shale oil output.

Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday. "Reimposing US sanctions is not a foregone conclusion just yet".

"Netanyahu may be the flavour of the day, but the larger issue driving this is what will Trump do with Iran?"

"Although the overall United States oil rig count rose by five, the prolific Permian region saw oil rigs decline by one", Anthony Headrick, energy market analyst and commodities futures broker at CHS Hedging LLC, said in an email. However, a bigger than expected jump in USA inventories sent crude oil futures... In Texas, oil production climbed to an all-time high in February, the federal government said.

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U.S. West Texas Intermediate and international-benchmark Brent crude oil are trading lower early Monday, but continue to hover close to their almost three-year highs reached earlier in the month. Total volume traded was about 8% below the 100-day average. Prices climbed as high as $75.47 last week, levels not seen since November, 2014.

Brent crude futures, the global benchmark, dipped 39 cents, or 0.5 per cent, to $74.25 a barrel at 0305 GMT. The global benchmark crude traded at a $6.43 premium to June WTI. French President Emmanuel Macron made a joint announcement with the office of Iranian President Hassan Rouhani that the two leaders would work together on preserving the deal.

On Friday, US Secretary of State Mike Pompeo said at a news conference that Trump would exit the deal next month "absent a substantial fix". "You shouldn't be surprised if there's a $5 flush out and some profit taking". The contract fell 0.4% last week. US crude production rose by 46,000 BPD the previous week, to 10.59 MMBPD.

Oil fell earlier in the day after a weekly report showed U.S. drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest since March 2015, General Electric's Baker Hughes energy services firm said.



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