Yahoo Finance Oil Price Fundamental Daily Forecast – Prices Up Over 1 Percent as OPEC Official Warns of Limited Supply
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading over 1 percent higher early Tuesday in response to a warning about limited supply from the Organization of Petroleum Exporting Countries (OPEC).
The warning came from the group’s top official as looming unilateral U.S. sanctions on oil sales by Iran, OPEC’s third-biggest supplier, are scheduled to take effect on November 4. Problems with supply are already being felt with most nations complying ahead of time with U.S. demands to end all exports of oil from Iran. According to reports, Iran’s crude exports are already falling as the U.S. prepares to curb Tehran’s ability to sell oil and participate in global financial markets.
At 0936 GMT, November WTI Crude Oil is trading $69.60, up $0.92 or +1.34% and December Brent Crude Oil is at $78.65, up $1.06 or +1.37%.
Iran is a “very important producer and exporter” of oil, the group’s Secretary-General Mohammad Barkindo said at an event in the United Arab Emirates city of Fujairah. “When you have major producers facing supply challenges, it’s of concern” for OPEC and consumers alike, he said.
Today’s warning from OPEC comes on the heels of supply concerns expressed last week by the International Energy Agency (EIA). It warned that prices could rise above $80 unless producers compensate for lost supply from OPEC members Iran and Venezuela. The latter is pumping half as much oil as in 2016 and faces further declines amid economic upheaval.
In addition to these obvious supply issues, trade disputes and financial woes in emerging market countries may affect crude demand.
Forecast
November WTI and December Brent Crude Oil should continue to push higher throughout the session as long as a possible supply shortage remains the theme. The rally could stop and prices could turn lower if someone counters with concerns over future demand in the wake of the announcement of additional tariffs on China by the United States.
For example, prices could weaken if China retaliates by cutting off the U.S. supply chain for raw materials and small components for U.S. made technological devices. Concerns over future demand could also be raised if China decides to decline the U.S. invitation to continue trade talks. This could encourage crude oil investors to book profits because it would point toward an escalation of the trade dispute and increase the possibility of the situation developing into a long-term event.
This article was originally posted on FX Empire
