Crude oil futures up Rs 31 on positive Asian cues

Crude oil futures up Rs 31 on positive Asian cues

With supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) tightening the market, analysts have been raising their oil price forecasts. Brent crude rose 0.6 percent to $58.16 a barrel while United States oil futures hovered near the $52 level in lunchtime trade.

U.S. West Texas Intermediate (WTI) crude futures were at $51.78 per barrel, down slightly from their last settlement, but still over 2 percent higher than last Friday and nearly a quarter above mid-June levels.

While Iraq has said Kirkuk oil fields siezed from Kurdish forces are running normally, investors are anxious about possible supply disruptions.

Approximately one million barrels per day (bpd) of oil were cut from the worldwide market during the previous round of sanctions against Iran.

Tension between the United States and Iran is also rising, increasing the global risk premium for oil.

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The other geopolitical risk helping crude prices is the possibility the USA will impose fresh sanctions on Iran, limiting its oil export capacity.

An escalating crisis between the Iraqi government and Kurdish separatists is threatening the supply of oil and could push up prices, analysts warned on Tuesday.

Markets have now turned to the Iraqi government's claims on Tuesday to have taken control of two large oil fields in Kirkuk, following a peaceful retreat by Kurdish peshmerga fighters.

Birol said the rate of compliance by OPEC and its partners in their targeted cutting of about 1.8 million barrels per day between January this year and March 2018 was about 86 percent. The Persian Gulf nation said it would support an extension of OPEC output cuts to the end of 2018 and insisted its production plans won't be disrupted by U.S. President Donald Trump's disavowal of the nuclear deal that's boosted its exports.

The upbeat forecast for oil demand growth, however, was offset by a rise in OPEC production by 90,000 barrels a day, fueling concerns that OPEC compliance with the deal to curb output is starting to wane.

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"What has helped risk appetite this morning is that the Chinese inflation data suggests the world's second biggest economy is doing much better than people expected this time a year ago for 2017", said Michael Hewson, chief markets analyst at CMC Markets.

USA inventories fell by 7.13 MMbbl last week, the American Petroleum Institute was said to report.

The euro slumped 0.2 percent to $1.1798, while the dollar index rose 0.16 percent as investors repositioned following disappointing inflation data on Friday that sent the greenback lower.

"We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel respectively", it said.

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