Oil up on Middle East tensions

15 April 2015, News Wires – Brent oil rose to $59 a barrel on Wednesday amid Middle East tension and signs of a dip in US production, but gains were capped after the International Energy Agency (IEA) said supplies might take longer to tighten than previously expected, Reuters reported.

brent.trader.shockedFront-month Brent crude futures were up $0.59 at $59.02 by 1:40 GMT, while US crude futures had gained $0.60 to $53.95, according to the news wire.

The spread between Brent and West Texas Intermediate crude front-month futures was at $5.11, after touching $4.78 – its lowest since 3 February, Reuters said.

Prices drew support from uncertainty in the Middle East, where fighting continues in Yemen. A Saudi-led campaign of air strikes against Iran-allied Houthi rebels threatened to turn into a ground intervention after Egypt said it had discussed military maneuvers with Saudi Arabia and other Gulf allies.

“Any instability’s always going to keep (prices) fairly buoyant,” said Rob Montefusco, a senior trader at Sucden Financial.

In the US, North Dakota’s February oil production fell by 15,000 barrels per day versus January, although the number of producing wells hit a record high, Reuters said.

That followed a US Energy Information Administration (EIA) report forecasting US shale production would fall by 45,000 bpd to 4.98 million bpd in May, which would be the first monthly decline in four years, the report continued.

But world oil markets may take longer to tighten than expected due to supply rising faster than demand, the IEA said on Wednesday. Production from the Organisation of the Petroleum Exporting Countries surged to 31.02 million bpd in March, almost a two-year high, outweighing a rise in demand.

Crude stocks in the US rose by 2.6 million barrels last week, compared with analysts’ expectations for an increase of 4.1 million barrels, the American Petroleum Institute (API) reported on Tuesday. Official inventory data is due at 2:30 GMT on Wednesday.


– Reuters

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