Oil steady, supported by U.S. stocks and supply concerns
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[September 20, 2018]
By Christopher Johnson
LONDON (Reuters) - Oil prices steadied on
Thursday but the market remained bullish after news of another fall in
U.S. crude inventories and on signs that OPEC may not raise production
enough to compensate for the loss of Iranian exports hit by U.S.
sanctions.
Brent crude oil <LCOc1> was unchanged at $79.40 a barrel by 0910 GMT,
stabilizing a little below the $80 mark. U.S. light crude oil <CLc1> was
40 cents higher at $71.52 after rising nearly 2 percent on Wednesday.
The North Sea benchmark has been trading below $80 for the past week
after conflicting reports of the market views of Saudi Arabia, the
biggest producer in the Organization of the Petroleum Exporting
Countries (OPEC).
Reuters reported two weeks ago that Saudi Arabia wanted oil to stay
between $70 and $80 a barrel for now, seeking a balance between
maximizing revenue and keeping a lid on prices until U.S. congressional
elections.

But on Tuesday Bloomberg cited unnamed Saudi sources as saying the
kingdom was comfortable with oil above $80, at least for the short term,
helping to push prices higher.
"Brent is definitely fighting the $80 line, wanting to break above, but
is still held back by the $70-$80-range hypothesis. But this is likely
going to break very soon," said SEB Markets chief commodities analyst
Bjarne Schieldrop.
U.S. crude oil stockpiles fell for a fifth straight week to 3-1/2 year
lows in the week to Sept. 14, while gasoline inventories also showed a
larger than expected draw on unseasonably strong demand, the Energy
Information Administration said on Wednesday. [EIA/S]
Crude inventories fell by 2.1 million barrels, compared with
expectations for a decrease of 2.7 million barrels.
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The oil platforms Atwood Aurora and Atwood Beacon are seen at the
Palumbo Malta Shipyard in Cospicua in Valletta's Grand Harbour,
Malta September 19, 2018. REUTERS/Darrin Zammit Lupi

"The bulls are back in charge," said Stephen Innes, head of trading for
Asia-Pacific at brokerage OANDA.
U.S. sanctions on Iran's oil exports come into force on Nov. 4 and many buyers
have already scaled back Iranian purchases.
It is unclear how easily other producers, such as Saudi Arabia, Iraq and Russia,
can compensate for lost supply.
OPEC and other producers, including Russia, meet on Sunday in Algeria to discuss
how to allocate supply increases to offset the loss of Iranian barrels.
"The current market betting line suggests price levels rather than global supply
levels will be the key determinant on turning on the oil taps," Innes said.
OPEC sources have told Reuters no immediate action is planned and producers will
discuss in Algeria how to share a previously agreed output increase.
(For a graphic on 'Iran crude oil shipments from Jan 2016 to August 2018' click
https://reut.rs/2p69koR)
(Reporting by Christopher Johnson in LONDON, Aaron Sheldrick and Osamu Tsukimori
in TOKYO; Editing by Dale Hudson and David Goodman)
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