Oil Price Hits $67 over Middle East Tensions


Oil rises

West Texas Intermediate (WTI) oil futures for April delivery had risen 5 cents, or 0.1 percent, to $61.24 a barrel, after settling up 23 cents on Thursday. Brent rose to $67.88 during the session, its highest level since late February.

Crude output remained under the nation's assigned quota, but the Kingdom increased diesel and gasoline and other fuel shipments by 27 percent to 1.912 million barrels per day in January, the Joint Organizations Data Initiative in Riyadh said. WTI was set to fall 1.3 percent this week, reversing the previous week´s 1.3 percent gain. Brent crude futures were at $66.26 per barrel, up 21 cents, or 0.3 per cent. Saudi Arabia called the 2015 nuclear deal between Iran and world powers a "flawed agreement" on Monday, on the eve of a meeting between Crown Prince Mohammed bin Salman and U.S. President Donald Trump.

Worries about falling production in Venezuela, whose output has been halved since 2005 to below 2 million barrels per day (bpd) due to an economic crisis, also supported oil markets.

Venezuela's February output was down by more than half a million barrels compared with a year ago, according to International Energy Agency data last week.

Such a factor is India, which has long flown below the radar of the crude oil market, despite becoming the second-biggest importer in the fast-growing Asian market behind China, and the third-biggest in the world after the United States.

It also imports a relatively small amount from Russian Federation, the main ally in the agreement between the Organization of the Petroleum Countries and other producers to limit output in order to drain excess global inventories, thereby boosting crude prices. Only Russia produces more, at around 11 million bpd, although United States output is expected to overtake Russia's later this year as well.

The market narrative consuming crude oil markets now is the interplay between supply cuts by OPEC and its allies and rising US shale output, with a side helping of Chinese imports driving demand. A widening discount of WTI to Brent crude makes it more attractive for foreign refiners to process USA oil.

The premium of Brent crude to WTI rose above US$4 a barrel today, its widest in a month.

Market participants will look to data from industry group the American Petroleum Institute to provide further indications of USA supply.

United States oil inventories data is expected over the next two days.

Data from market intelligence firm Genscape showed gasoline inventories in the NY harbor region fell by about 1.1 million barrels last week, traders who saw the data said.

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