Singapore: Oil prices on course for the longest run of weekly gains in four months, as energy giants to major trading houses warned that a supply crunch could propel prices to $100 a barrel. Futures in New York were set for a 1.8 percent advance this week, poised for a third weekly increase. Total SA Chief Executive Officer Patrick Pouyanne said a supply loss in Iran and declining output in Venezuela may help push prices back to levels last seen in 2014. Meanwhile, the U.S. Energy Department dismissed speculation it will release emergency crude reserves to temper prices.

Oil has risen to the highest in almost four years after OPEC showed little sign of immediately boosting production despite President Donald Trump’s demand to lower prices. Concerns over tightening supplies are growing as more buyers of Iranian crude -- most recently those in India -- shun purchases from the Islamic Republic before U.S. sanctions take full effect in early November.

“For now buyers seem to be in control," said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “Fundamental support remains, given the uncertainty related to Iran’s ability to maintain production before and after November. But bears may take comfort from the fact that, since the break higher on Monday, oil has failed to maintain the momentum and has been trading sideways."

Rising higher

West Texas Intermediate for November delivery traded at $72.06 a barrel on the New York Mercantile Exchange, down 6 cents, at 10:16 a.m. in London. The contract has climbed $1.28 this week. Total volume traded was about 39 percent below the 100-day average.

Brent for November was 14 cents higher at $81.86 on the ICE Futures Europe exchange. The contract rose 3.9 percent this week. The global benchmark traded at a $9.59 premium to WTI.

Total’s Pouyanne said that tightening supplies could push prices back into triple digits, but that demand may drop. Trading houses such as Trafigura Group Pte Ltd and Mercuria Energy Group Ltd have also forecast oil over $100 a barrel, while banks including Bank of America Corp. and JPMorgan Chase & Co. lifted their price forecasts. Meanwhile, BP Plc cautioned that a rally in prices may not be sustainable long-term because of the potential negative impact on demand from the U.S.-China trade tensions.

Investors are now watching to see what Trump will do next after U.S. Energy Secretary Rick Perry ruled out the release of oil from the Strategic Petroleum Reserve, saying the move would have “a fairly minor and short-term impact." Earlier this week, Trump accused the Organization of Petroleum Exporting Countries of “ripping off the rest of the world" after the group stopped short of promising specific extra volumes of crude.

This story has been published from a wire agency feed without modifications to the text.

Close