New York’s main contract, West Texas Intermediate (WTI) or light sweet crude for delivery in November, added $1.52 to $72.30 after earlier striking a two-month pinnacle.
Brent could rise to $100 for the first time since 2014 as the market braces for the loss of Iranian supplies due to US sanctions, according to Mercuria Energy Group Ltd. and Trafigura Group.
Saudi Arabia leads the Opec oil cartel, while Russian Federation is the biggest oil producer outside the group.
Fibonacci projections at $82.84 (200% of the upleg from $77.36) and $83.89 (Fibo 238.2%) mark next targets, however, bulls may accelerate further in unobstructed positive environment.
Recently, crude oil prices have benefited from unnamed Saudi Arabia sources implying that the producer would not increase production, being comfortable with prices above $80/barrel.
Interested in Oil technicals? However, the Saudis face another challenge which is to appease President Donald Trump while keeping the Kingdom’s vision together of a major alliance between crude oil producers.
“The market’s still being driven by concerns about Iranian and Venezuelan supply”, said Gene McGillian, director of market research at Tradition Energy in Stamford.
The Trump administration has told countries like China, India and Turkey to cut all imports of Iranian oil by November 4 when the USA re-imposes sanctions against Tehran.
The US President said in a tweet last week that Opec “must get prices down now!” by raising global output.
American tight oil production will rise to 16 MMbpd by the late 2020s, the report said, making up nearly 25% of total non-OPEC supply by then.
“Balances are precarious and the lack of spare capacity could see crude pricing well above US$90 or even US$100, should all of the potential risk in the market materialize”, analysts including Ed Morse said in the note. “My information is that the markets are adequately supplied”.
Such prices made oil companies like Exxon Mobil Corp. the world’s most valuable firms and spurred investment in risky billion-dollar oil projects.
Oil prices rose on Monday as USA markets tightened just weeks ahead of Washington’s plan to impose new sanctions against Iran.
According to analysts from Energy Aspects, the meeting on Sunday could lead to an increase in production, “but the market starts to ask where could well come in these barrels”.
The lack of OPEC’s immediate action could mean higher prices.
He further said all producers – OPEC and non-OPEC – wanted to keep the price of oil at around $80 per barrel.
“Since June, Saudi Arabia has met the demand for every barrel that has been requested”, its oil minister, Khalid al-Falih, said. Gasoline prices in Japan are at their highest level in 3 years and 9 months.
“We view Brent’s rally above $80 per barrel as fundamentally justified”, said Fitch Solutions in a note.