Crude Advances For Fourth Week as Supply Jitters Stoke Concern

(Bloomberg) -- Oil rose for a fourth straight week amid concern that Saudi Arabia and Russia may not pump enough crude to prevent a supply crunch as Iranian cargoes disappear from world markets.

Futures were little changed in New York on Friday, ending the week 1.5 percent higher. Prices may hit $100 a barrel this autumn as U.S. pressure stymies exports from Iran, OPEC’s No. 3 producer, according to Russian Energy Minister Alexander Novak. Saudi Arabian Energy Minister Khalid Al-Falih said the kingdom is boosting production and will supply needy refiners.

“We’re just seeing a lot of fear about future supply,” said Ashley Petersen, senior oil market analyst at Stratas Advisors LLC.

Saudi Arabia is juggling intense pressure from U.S. President Donald Trump to boost output and ease high prices. The kingdom has lifted production almost to a record and may raise it again next month, although doing so will infringe on available spare capacity, limiting Saudi Arabia’s ability to react to other supply shocks.

“The Saudis won’t flood the market and they don’t want to see it oversupplied,” said Giovanni Staunovo, an analyst at UBS Group AG. “Their demand is picking up because Iran volumes are falling. But the price for the Saudi strategy to cover those supply losses is extreme low spare capacity, and that worries the market.”

See Also: China Slams Brakes on U.S. Crude Oil Imports Amid Trade Tensions

West Texas Intermediate for November delivery settled at $74.34 a barrel on the New York Mercantile Exchange. The string of weekly increases was the longest since January.

Brent for December settlement declined 42 cents to settle at $84.16 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.90 premium to WTI for the same month.

Russia’s Novak was not alone in predicting a return to three-digit price levels last seen in 2014. As Iran’s customers cut purchases and Venezuela’s industry struggled, trading giant Mercuria Energy Group Ltd. said last month Brent may spike over $100 in the fourth quarter and Trafigura Group expects it in early 2019. While Goldman Sachs Group Inc. isn’t that bullish, the Wall Street bank sees a risk of oil holding above $80 toward the end of the year.

©2018 Bloomberg L.P.