Brent gains momentum on supply concerns
The front-month ICE Brent contract has gained by $1.62/bbl on the day, to trade at $70.04/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Brent crude’s price has moved higher due to oil supply-related concerns, snapping a three-day losing streak.
Several oilfields in Iraq’s semi-autonomous Kurdistan region halted production, following drone strikes that targeted infrastructures operated by various companies.
The attacks have reduced crude output from about 280,000 b/d to 140,000 b/d to 150,000 b/d, Reuters reported, citing two energy officials.
“Iraq has lost about 200kb/d [200,000 b/d] of production due to drone attacks on several fields in Kurdistan,” said ANZ Bank’s senior commodity strategist Daniel Hynes.
Besides, Brent’s price gained after the European Union (EU) reached an agreement on the 18th sanctions package against Russia that was proposed last month. The measures aim at further crippling Moscow’s oil and energy revenues.
“Near-term oil fundamentals remain supportive, with the market set to remain fairly tight through this quarter,” two analysts from ING Bank noted.
Downward pressure:
Brent’s price gains were capped by some concerns of a supply glut in the second half of this year as OPEC+ members continue to hike production levels every month.
Total crude oil production by OPEC+ members averaged 41.56 million b/d last month, about 349,000 b/d higher than in May.
Oil production by OPEC+’s de-facto leader Saudi Arabia, increased by 173,000 b/d on the month to 9.36 million b/d in June.
“OPEC+ output is rising and Saudi Arabia increased flows to 6.43mb/d [6.43 million b/d] in H1 July,” Hynes added.
By Aparupa Mazumder
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