Oil steady as U.S. output gains offset Middle East tensions

Brent Crude

Daily January Brent Crude

NEW YORK, Oct 16 (Reuters) - World stocks rose on Monday and copper touched a three-year high as upbeat Chinese data drove optimism about the world's second biggest economy, while oil prices jumped as an escalation in fighting between the Iraqi government and Kurdish forces threatened supply. As per the report, "Brent crude was trading over $1 higher at $58.35 per barrel, while US West Texas Intermediate jumped 88 cents to $52.31". If prices remain high the outlook may be positive for breakbulk operators serving the oil sector as the higher price point supports renewed investment in offshore development.

According to some reports, Kurds had shut down some 350, 000 barrels per day (bpd) of production from major fields Bai Hassan and Avana because of security worries.

Efforts by the Organisation of the Petroleum Exporting Countries (Opec) and Russian Federation to restrict supply have eaten into reserves in industrialised economies. "If there [were new sanctions], we expect that several hundred thousand barrels of Iranian exports would be immediately at risk", Goldman said.

Jeff Brown, president of consultancy Facts Global Energy (FGE), said at the Reuters Global Commodities Summit last week that one potential upside for oil prices would be the US imposing fresh sanctions on Iran.

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Brent oil prices retreated from three-week highs on Wednesday, after a surprising drop in USA refining rates and an unexpected gasoline and diesel stock build signaled lower demand in the world's top oil consumer.

Goldman Sachs said the Kirkuk cluster of oil fields, which pump about 500,000 bbl/d and extend from the autonomous Kurdistan region into northern Iraq, were at risk from the conflict. The global benchmark crude traded at a premium of $5.99 to WTI for December.

U.S. President Donald Trump on Friday refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide on further action against Tehran.

Analysts forecast US crude inventories declined by about 4.2 million barrels in the week to October 13.

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In an otherwise typically quiet Monday market, the price of Crude Oil is up nearly 1.7% since this week's open, as at the time of writing.

During the previous round of sanctions against Iran, about 1 million bbl/dd of oil was cut from global markets.

However, inventories of gasoline and diesel rose, the latter unexpectedly, reviving some concerns about elevated stockpiles during a time when demand for petroleum products declines.

Australian shares .axjo extended their winning streak to a fourth straight session to rise 0.6 percent, while Japan's Nikkei .n225 rallied for a sixth day to the highest since November 1996.

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