* Saudi Crown Prince visits Washington
* U.S., Saudi Arabia expected to put pressure on Iran
* U.S. could reimpose sanctions against Tehran
* Healthy demand also supports crude prices
* But relentless rise in U.S. crude production caps gains
(Adds Citi comment, updates prices)
By Henning Gloystein
SINGAPORE, March 21 (Reuters) - Oil prices rose on
Wednesday, lifted by tensions in the Middle East and healthy
demand, although rising U.S. output continued to weigh on
U.S. West Texas Intermediate (WTI) crude futures were
at $63.80 a barrel at 0230 GMT, up 26 cents, or 0.4 percent,
from their previous close.
Brent crude futures were at $67.71 per barrel, up 29
cents, or 0.4 percent.
Saudi Arabia's Crown Prince Mohammed bin Salman on Tuesday
arrived in Washington for a state visit, raising speculation the
United States could reimpose sanctions on Iran, following
rewnewed criticism of the 2015 nuclear deal.
"The presence of the Saudi Crown Prince... in Washington and
his clear agenda to ramp up pressure on Iran, has for me, been
the key driver... of oil, which rose strongly," said Greg
McKenna, chief market strategist at futures brokerage AxiTrader.
Analysts also pointed to the nomination of Mike Pompeo as
new U.S. Secretary of State as a risk to oil markets, given he
fiercely opposed the 2015 pact as a member of Congress.
"The nomination of Mike Pompeo for U.S. Secretary of State
... raises the likelihood of oil trade disruptions," U.S. bank
Citi said in a note.
Should the United States reimpose sanctions against Iran,
energy consultancy FGE said that would likely result in a
250,000 to 500,000 barrels per day (bpd) drop in its exports by
Analysts also pointed to healthy economic growth and a weak
dollar as oil price drivers.
In a sign of healthy demand, U.S. crude stocks fell by 2.7
million barrels in the week ended March 16 to 425.3 million, the
American Petroleum Institute said on Tuesday.
"The global economy is humming, and robust demand solidly
underpins commodity prices," said Norbert Ruecker, head of macro
and commodity Research at Swiss bank Julius Baer.
Despite this, he said seasonally low demand at the end of
the northern hemisphere winter season meant he had "a rather
cautious near-term outlook on commodities."
Looming over oil markets has been surging U.S. crude
production <C-OUT-T-EIA>, which has risen by more than a fifth
since mid-2016, to 10.38 million bpd, overtaking top exporter
Saudi Arabia and putting the United States within reach of
Russia's 11 million bpd.
Still, some U.S. producers are holding back expansion in
order to prevent a price crash.
"Larger players are holding back capital expenditures in an
attempt to avoid past mistakes," said consultancy FGE.
(Reporting by Henning Gloystein; editing by Richard Pullin)
First Published: 2018-03-21 02:47:34
Updated 2018-03-21 04:41:38
© 2018 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.