Seoul/London: Oil traded above $69 a barrel as investors prioritize the loss of supplies in key OPEC nations against the threat to demand in emerging markets.
Futures gained 0.8% in New York, extending Friday’s 0.6% increase. Supply concerns from losses in Venezuela and Iran are eclipsing the drag on demand from economic turbulence in emerging markets, according to Bank of America Corp. Russian Energy Minister Alexander Novak and his Saudi Arabian counterpart Khalid al-Falih met in Moscow Saturday to confirm their willingness to stabilize prices and react to any changes in the market.
Crude has mostly stayed below $70 a barrel since mid-July as a trade dispute between the US and China threatens global economic growth. Still, prices have increased almost 7% from last month’s lows as speculation swirls over whether a potential supply gap can be filled as American sanctions curb Iran’s oil exports and Venezuela’s unraveling economy hits its energy infrastructure.
“For now, supply issues are a much bigger problem," said Francisco Blanch, head of commodities research at Bank of America in New York.
West Texas Intermediate for October delivery was at $69.53 a barrel on the New York Mercantile Exchange, up 54 cents, at 10:59am in London. The contract climbed $1.24 last week. Total volume traded was about 31% below the 100-day average.
Brent for November settlement traded at $78.64 a barrel on the ICE Futures Europe exchange, up 55 cents, after rising $1.26 last week. The global benchmark crude traded at a $9.34 premium to WTI for the same month.
“The US-China trade tension restricts oil from rising further, while optimism over Saudi and Russia making up for Iran’s losses is keeping prices from falling lower," Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul. “It’s important for OPEC and its allies to make sure prices don’t drop excessively," and the market is expecting reassurance when the group’s ministers meet this weekend in Algiers.