Oil steadies as Iran and
OPEC offset by U.S. drilling rebound
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[February 06, 2017]
By Alex Lawler
LONDON
(Reuters) - Oil steadied near $57 barrel on Monday as OPEC supply cuts
and rising tensions between the United States and Iran were countered by
ample inventories and signs that higher prices will revive U.S. output.
The Trump administration's new sanctions against Iran, though not
affecting oil output, raised concern about the potential for further
developments that could hinder export growth in OPEC's third-largest
producer.
U.S. energy companies added oil rigs for a 13th week in 14, data showed
on Friday. Despite the OPEC cuts, U.S. crude inventories rose by more
than expected last week.
Brent crude was trading at $56.86 a barrel by 1223 GMT, up 5 cents,
having touched an intra-day high of $57.13. U.S. crude was up 15 cents
at $53.98.
"The tug-of-war between oil bulls and bears continued last week and
there are no clear signs who could turn out to be the winner," said
Tamas Varga of oil broker PVM.
"The result is a rangebound market where buyers shy away on a pop over
$57 basis Brent, but they feel a dip to the $54 level is an attractive
purchase."
Tension between Tehran and Washington has risen since an Iranian missile
test that prompted the United States to impose sanctions on individuals
and entities linked to the Revolutionary Guards.
"The growing tensions between the U.S. and Iran are ... having a
price-supportive effect," Commerzbank said, adding that, while the
sanctions don't affect output, "this could change if the situation were
to escalate".
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A general view of a crude oil importing port in Qingdao, Shandong
province, in this November 9, 2008 file photo.
REUTERS/Stringer/Files
Iran has been raising crude output since most international sanctions
over its nuclear program were lifted in 2016.
Tehran is exempt from the supply cuts agreed by OPEC alongside Russia
and other independent producers. Implementation of the cuts began on
Jan. 1 with the aim of reducing output by almost 1.8 million barrels per
day.
The OPEC members included in the deal have implemented at least 80
percent so far, according to a Reuters survey and analysts. Russia has
cut about 100,000 bpd and plans to increase that to 300,000 bpd.
Against this backdrop, more investors are betting on rising prices
despite indicators such as the Baker Hughes rig count pointing to
increased U.S. supply.
Investors raised their net long U.S. crude futures and options positions
in the week to Jan. 31, the Commodity Futures Trading Commission said on
Friday.
(Additional reporting by Henning Gloystein; Editing by Adrian Croft and
David Goodman)
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