Oil ends at a nearly 3-week high as Middle East tensions threaten supplies
Oil prices settle at a nearly three-week high on Monday, as increased tensions in the Middle East raised concerns over global crude supplies.
November West Texas Intermediate crude CLX7, -0.17% climbed by 42 cents, or 0.8%, to settle at $51.87 a barrel on the New York Mercantile Exchange for its highest settlement price since Sept. 27, according to FactSet data.
Brent crude for December LCOZ7, +0.00% gained 65 cents, or 1.1%, to $57.82, also ending around its highest level since late September.
“The oil market is firmly in the grip of geopolitical risks at present,” analysts at Commerzbank said in a Monday note.
On Monday, the risks in the Middle East intensified after Iraqi forces reportedly entered Kirkuk, which is a major oil-producing area and has been held by Kurdish fighters. The Iraqi army has taken full control of the city and secured North Oil Company facilities, according to the Financial Times.
Tensions between the Kurdish Regional Government and Baghdad have been building after the Kurds voted for independence in a September referendum, sparking concerns over Iraq’s oil exports. Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries.
“In recent months we have stressed on a number of occasions that the tensions and potential effects on the production and transport infrastructure in the region pose the biggest risk to our fairly conservative price forecasts. We otherwise see the oil market as still amply supplied, which would rather justify a Brent price of $50 per barrel,” said analysts at Commerzbank.
Still, Mihir Kapadia, chief executive officer and founder of Sun Global Investments, said that “while there is an ongoing political feud, it’s out of the best interest of both sides to not disrupt oil production.”
Last week, the U.S. oil benchmark rose more than 4%, boosted by a mix of bullish Chinese data and President Donald Trump’s refusal to certify Iran’s compliance with the nuclear deal.
Back in the U.S. Monday, a monthly report from the Energy Information Administration showed expectations for a rise or 81,000 barrels a day in November shale crude-oil production from seven major U.S. oil plays. The report has forecast increases in shale-oil output every month so far this year.
In energy products on Monday, gasoline for November RBX7, -0.12% shed 0.3% to $1.617 a gallon, while November heating oil HOX7, +0.06% added 0.9% to $1.813 a gallon.
November natural gas NGX17, +0.81% slid 1.8% to $2.946 per million British thermal units, easing back after posting a climb of nearly 5% for last week.