S. Korea boosts Iran crude oil imports

OPEC and the International Energy Agency buoyed crude markets with higher demand forecasts that signalled the glut that’s weighed on prices may contract further.

The IEA Wednesday lifted its estimate of 2017 oil demand growth for the third month in a row, to 1.6 million b/d.

Global oil supply fell in August due to unplanned outages and scheduled maintenance, mainly in non-OPEC countries, which is the first decline in four months.

“In our opinion, the medium-term price trend will be influenced more by whether, and how, U.S. production continues to rise – recently it fell short of expectations”, said analysts from Commerzbank in a note Thursday.

Analysts at investment bank Panmure Gordon believe prices have now advanced for the last two weeks off increased demand forecasts from both Opec and the IEA combined with the near-term demand uplift expected as U.S. oil refineries seek to restart operations post-Hurricane Harvey, which hit energy-rich Texas among other North American states.

South Korea’s imports of Iranian crude oil increased 40.2 per cent in August from the same month a year earlier, with its refiners snapping up competitively priced cargoes from the Middle Eastern nation. With the lack of new major project sanctions, the bank analysts expect conventional non-Opec supply to start declining post-2018 and maintain their 2018 and 2019 Brent price assumptions at $65 and $70 a barrel, respectively. It flipped briefly into contango at end August before flipping back into backwardation September 5, and settling at 25 cents/b at the NY close Thursday.

“On the USA side, steadily declining rig counts of late have raised the possibility of stalled US production gains, with current output still holding below pre-Harvey levels”, said Robbie Fraser, commodity analyst at Schneider Electric (PA:), in a note. Two weeks later, only three Gulf Coast refineries remain shut, according to the Department of Energy.

To sustain current high prices, continued strength in demand is needed, he said, noting that a weak fourth quarter in the United States could prompt traders to back off long positions.

“The feel-good factor appears to have returned to the oil market”, said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Underpinning the prevailing sentiment is the positive afterglow of this week’s frenzy of bullish oil demand forecasts from the leading energy agencies”.

Leave a Reply

Your email address will not be published. Required fields are marked *