Oil prices rose on Monday as U.S. drilling for new production stalled and as the market eyed tighter conditions once Washington’s sanctions against Iran’s crude exports kick in from November.
U.S. West Texas Intermediate (WTI) crude futures were at $67.96 per barrel at 0150 GMT, up 21 cents, or 0.3 percent, from their last settlement.
Brent crude futures climbed 30 cents, or 0.4 percent, to $77.13 a barrel.
U.S. energy companies cut two oil rigs last week, bringing the total count to 860, energy services firm Baker Hughes said on Friday.
The U.S. rig count has stagnated since May, after staging a recovery since 2016, which followed a steep slump the previous year amid plummeting crude prices.
Outside the United States, new U.S. sanctions against Iran’s crude exports from November were helping push up prices.
Energy consultancy FGE said several major Iran customers like India, Japan and South Korea were already cutting back on Iran crude.
“Governments can talk tough. They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to … say they won’t risk it,” FGE said.
“U.S. financial penalties and the loss of shipping insurance scares everyone,” it said in a note to clients.
U.S. rig count has stagnated since May: tmsnrt.rs/2NsKwpc
With U.S. rig activity stalling and Iran sanctions looming, the oil market outlook is tightening.
“Investors have largely turned positive again … likely welcoming the return of backwardation,” said Edward Bell, commodity analyst at Emirates NBD bank.
Backwardation describes a market in which prices for immediate delivery are higher than those for later dispatch. It is considered a sign of tight conditions giving traders an incentive to sell oil immediately instead of storing it.
The Brent backwardation between October this year and mid-2019 is currently around $2.20 per barrel. <0#LCO:>
While Washington exerts pressure on other countries to fall into line and also cut imports from Iran, it is also urging other major producers to raise their output in order not to create too strong a price spike.
U.S. Energy Secretary Rick Perry will meet counterparts from Saudi Arabia and Russia on Monday and Thursday, respectively, as the Trump administration seeks the world’s biggest exporter and producer to keep output up.
One key question going forward is how demand develops amid the trade dispute between the United States and China, as well as general emerging market weakness.
Consultancy FGE warned that “trade wars, and especially rising interest rates, can spell trouble for the emerging markets that drive (oil) demand growth.”
Despite this, FGE said the likelihood of significantly weaker oil prices was relatively low as the Organization of the Petroleum Exporting Countries (OPEC) would withhold output to prevent prices from plunging.
“We see $65 per barrel as a trigger for cuts,” FGE said.
Russia, U.S. & Saudi crude output: tmsnrt.rs/2NqbrBZ
Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin
Brazilian President Jair Bolsonaro takes on Norway for whaling, but bungles it
Brazilian President Jair Bolsonaro on Monday responded to Norway's decision to halt its forest protection subsidies, taking to Twitter to criticise the Scandinavian country for its whaling practice and post spectacular -- albeit misleading -- images.
"Look at the killing of whales sponsored by Norway," Bolsonaro wrote on Twitter.
The post includes a video and photographs of a spectacular whale hunt, where mammals in the shallow waters of a bay are slaughtered by people wading on shore, armed with hooked knives. The whales' blood turns the waters red.
However, the images, reportedly taken on May 29 in Norway, illustrate a "grind", a type of pilot whale hunt practised exclusively in the Faroe Islands -- a Danish territory in the North Atlantic.
Orange County teens busted for singing obscure Nazi song while giving Hitler salutes
Nearly a dozen high school students from Southern California delivered Nazi salutes and sang a Nazi marching song in a video posted on social media.
The video was uploaded to Instagram by one member of the boys’ water polo team at Pacifica High School in Garden Grove, California, along with lyrics to the song played for German troops during World War II, reported The Daily Beast.
A spokesperson for the Garden Grove Unified School District told the website administrators learned of the incident in March, four months after the video was posted, but declined to say whether any of the students were disciplined.
Donald Trump is America’s clown prince
“The problem with political jokes,” Groucho Marx once said, “is that they keep getting elected.” Never has that been more true than today. We live in a world ruled by clowns. I mean that both literally and figuratively. Our century has ushered in the Age of the Clown Politician.
In Ukraine, Volodymyr Zelensky, who played a Ukrainian president on the popular television comedy SERVANT OF THE PEOPLE, was elected to be the real president with over 70 percent of the vote. Zelensky is literally a clown. In Great Britain, Boris Johnson, who will replace Theresa May as prime minister, is a buffoon who elicits laughter –usually unintended- wherever he goes. Mr. Johnson is figuratively a clown.