Crude prices continued to climb early on on the expected impact of U.S. sanctions on Iranian oil exports and suggestions from OPEC and other producers that they aren’t in a rush to increase production to offset the hit to supply. Brent crude was up nearly 1 per cent in the predawn hours. Earlier, Brent hit US$82.20, its best level since November 2014. The day range on Brent so far is US$81.17 to US$82.20. West Texas Intermediate was also higher at last check, sitting in the upper half of the day range of US$72.02 to US$72.66.
“While the sentiment is securely buttressed by Iran sanction, the question we have is not so much the case of whether OPEC and Non-OPEC are not offering up a concession to counter the expected supply drop from Iran sanctions,” OANDA Head of Trading Asia Stephen Innes said. “But even if they wanted to ramp up production, could they physically deliver near-term supplies to tame this raging oil bull?”
“If OPEC is physically unable to ramp up production, then Oil prices do indeed have much further to run as this will be viewed as an extremely bullish signal for near-term prices.”