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Oil jumps 2 % as market tightens, more gains seen

27 September 2018

Notably, Brent crude just made a new high for the year, while WTI has jumped above its short-term high of $71.38.

OPEC and non-OPEC producers reached the agreement at its 10th Joint Ministerial Monitoring Committee (JMMC) in Algeria on Sunday, despite US President Donald Trump's repeated calls for lower prices.

Oil is maintaining strong bullish momentum, with daily MA's in full bullish configuration, supporting the advance.

Meanwhile, Daniel Jaeggi, president and co-founder of Mercuria Energy Trading said worldwide crude oil prices could surpass the $100/b level, indicating that the global oil market does not have an adequate supply response for a potential reduction in Iranian supplies.

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However, Saudi Arabia's influential oil minister Khalid al-Falih left the way open to a future production hike, as supplies tighten due to the U.S. imposing sanctions on Iranian oil from November this year.

Falih said Saudi Arabia has spare capacity to boost output but that this action was not necessary for now, and might not be needed next year because OPEC projects there will be a marked rise in oil production from non-OPEC countries which could outpace global demand.

Iran told OPEC its production had been steady in August at 3.8 million bpd.

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Even though several European countries have said they are seeking to protect their companies from renewed USA sanctions against Tehran, several major companies such as Total announced they were suspending activities in Iran. But the American Petroleum Institute points out that during that time, exports fell 1.3 million barrels per day.

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It remains to be seen if the Organization of the Petroleum Exporting Countries (OPEC) will raise output to offset dwindling supplies.

Of course, the OPEC member most eager to take a stab at Trump was Iran, and Hossein Kazempour, OPEC representative for the Islamic Republic, did so by telling media that the brash billion aires incendiary tweets "are doing actually is [leading to] higher prices because the fundamentals even do not warrant this level of prices".

Mr Trump said last week that OPEC "must get prices down".

In a speech during the meeting, Algerian Energy Minister Mustapha Qaitouni emphasised the importance of working to find ways and means to ensure the sustainability of cooperation and dialogue not only between OPEC member countries and non-member countries but also between producing and consuming countries.

The Algiers meeting did not bring about an increase in output-and that is fueling the rally.

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The meeting ended with no formal agreement on any additional supply boost. Early last week, the market was supported by a report which said Saudi Arabia would be comfortable with Brent prices over $80 a barrel.

Oil jumps 2 % as market tightens, more gains seen