Oil rises on signs OPEC not prepared to boost output
* OPEC, non-OPEC ministers meet in Algeria on Sunday
* Market watching trade war impact on crude demand
* U.S. sanctions on Iran continue to support prices
* U.S. shale output expected to rise in October
(Updates prices, China's tariff announcement)
By Julia Payne
LONDON, Sept 18 (Reuters) - Oil firmed on Tuesday on signs
that OPEC would not be prepared to raise output to address
shrinking supplies from Iran, and as Saudi Arabia signalled it
was in no rush to bring prices down.
Brent crude futures were up $1.45 a barrel at $79.50
barrel at 1346 GMT.
U.S. West Texas Intermediate (WTI) crude was up $1.32
cents at $70.23 per barrel.
Ministers from OPEC and non-OPEC producers meet on Sunday to
discuss compliance with output policies. OPEC sources have told
Reuters no immediate action was planned and producers would
discuss how to share a previously agreed output increase.
Bloomberg reported on Tuesday, citing unnamed Saudi sources,
the kingdom was currently comfortable with prices above $80 per
barrel, at least for the short term.
The news agency reported that while the kingdom had no
desire to push prices higher than $80 a barrel, it may no longer
be possible to avoid it. U.S. sanctions affecting Iran's
petroleum sector due to come into force from Nov. 4.
OPEC and industry sources have previously told Reuters the
kingdom was keen to keep the lid on prices at $80 per barrel
until U.S. congressional elections to avoid coming under any
additional pressure from U.S. President Donald Trump.
"It casts doubts on whether Saudi Arabia will increase
output to compensate for the loss of Iranian crude once
sanctions come into effect," said Carsten Fritsch, an analyst at
Commerzbank in Frankfurt.
Russian Energy Minister Alexander Novak said an oil price
between $70 and $80 was temporary and sanctions-driven, adding
that the long-term price would stand around $50.
U.S. Energy Secretary Rick Perry said last week in Moscow
that he did not foresee any price spikes once sanctions came
into effect, and was positive about Saudi output.
TRADE WAR CAPS GAINS
However, the longer-term outlook remains weighed down by an
escalation in the China-U.S. trade war that has clouded the
outlook for crude demand.
China said it had no choice but to retaliate against new
U.S. trade measures after Trump imposed 10 percent tariffs on
about $200 billion worth of Chinese imports.
On Tuesday, China announced tariffs of 5-10 percent, a lower
volume than previously planned, on $60 billion of U.S. goods
that would become effective on Sept. 24. Trump, meanwhile,
accused Beijing of trying to sway the U.S. congressional
election by targeting farmers.
The tariffs are likely to limit economic activity in both
China and the United States, potentially hitting growth in
demand for oil as less fuel is consumed to move goods for trade.
"Oil markets are in a tug-of-war as Iran sanctions will
continue to provide near-term support, while discussions around
global demand in the wake of this morning's tariffs and
speculation of further OPEC supply increases should temper
upside ambitions," said Stephen Innes, head of trading at
(Reporting by Meng Meng and Aizhu Chen in BEIJING, additional
reporting by Roslan Khasawneh in SINGAPORE
Editing by Kirsten Donovan, David Evans and Jan Harvey)
First Published: 2018-09-18 03:12:32
Updated 2018-09-18 15:59:48
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