Oil
up more than $1 after Saudi's Asia price hike
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[April 06, 2015]
By Himanshu Ojha
LONDON (Reuters) - Oil futures climbed
more than $1 a barrel on Monday, after Saudi Arabia raised its prices
for crude sales to Asia for the second month running, signaling improved
demand in the region.
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International benchmark Brent regained ground after tumbling as
much as 5 percent on Thursday, when a preliminary nuclear deal was
finally reached between world powers and Iran. More Iranian oil
could enter global markets if that is followed by a comprehensive
deal by June.
But expectations of an immediate increase in supply have been
tempered as analysts warned a ramp-up in exports could take months
and would likely not happen before 2016.
"While clearly a bearish headline, a final deal and full lifting of
sanctions still faces a number of obstacles," Morgan Stanley
analysts said in a note.
"Even if a final deal is reached, we do not expect any physical
market impact before 2016," the analysts said.
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Brent crude for May delivery <LCOc1> touched a high of $56.90 a
barrel and was up $1.50 from Thursday at $56.45 by 5.48 a.m. EDT.
U.S. crude for May delivery <CLc1> was $1.49 higher at $50.63 a
barrel, after earlier touching $50.97.
There was no settlement in either Brent or U.S. crude futures on
Friday as markets were closed for the start of the Easter holiday.
Despite the sanctions on Iran, China's imports from the OPEC
producer are set to rise from August as a Chinese state trader has
signed a deal with the National Iranian Oil Company to buy more
condensate.
The world's top exporter Saudi Arabia kept output steady and cut its
official selling prices (OSPs) sharply late last year in a fight for
market share during a global supply glut.
Its ability to raise prices for April and May suggests its strategy
is working, although competition has kept its flagship Arab Light at
a discount to Oman/Dubai quotes, analysts said.
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"There is still competition for the Asia market even though it is
also a sign that some of the production elsewhere is less able to
compete in the market right now," said Shunling Yap, a senior oil
and gas analyst at BMI Research.
Concerns over fighting in Yemen also supported prices, as fighting
between a Saudi-backed coalition and Shi'ite Houthi forces continued
in the port city of Aden, which overlooks a major shipping lane
between Europe and the Arab Gulf.
On the supply front, the number of rigs drilling for oil in the
United States declined by 11 last week to 802, the smallest drop
since December, a weekly survey by oil service firm Baker Hughes
showed on Thursday.
(Adddition reporting by Jacob Gronholt-Pedersen and Florence Tan in
Singapore; Editing by Hugh Lawson)
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