Oil prices rise in tightening market, traders expect further increases

SINGAPORE (Reuters) – Oil prices rose on Monday as US markets prepared to impose new sanctions on Iran, with major traders and banks predicting a price increase of $ 90 per barrel in the coming months.

The Brent Brut LCoC1 futures were $ 79.82 per barrel at 0501 GMT, up $ 1.02 or 1.3% from their last close.

West Texas Intermediate (WTI) futures were up 82 cents, or 1.2%, to $ 71.60 per barrel.

In a context of market tightening, US commercial crude oil stocks C-STK-T-EIA are at their lowest level since early 2015. And while C-OUT-T-EIA production is around the record of 11 million barrels a day, recent moderate US drilling activity indicates a slowdown.

(For a chart on "US oil drilling, production and storage levels," click on tmsnrt.rs/2OKP4nJ)

Trafigura and Mercuria said on Monday that Brent could reach $ 90 a barrel at Christmas and even more than $ 100 in early 2019, as markets tighten after US sanctions against Iran are implemented from November.

J.P. Morgan expects the sanctions to result in a loss of 1.5 million bpd, while Mercuria has warned that 2 million bpd could be eliminated from the market.

The Organization of the Petroleum Exporting Countries (OPEC), which dominates the Middle East, as well as the main Russian producer, discuss the increase in production to counter the decline of the Iranian supply, but no decision has yet been made public.

"We expect OPEC countries with spare capacity, led by Saudi Arabia, to increase production but not fully compensate for the decline in Iran's barrels," said Edward Bell, a commodity analyst at Saudi Arabia. Emirates NBD.

J.P. Morgan said in his latest market outlook, released Friday, that "a peak at $ 90 a barrel is likely" for oil prices in the coming months because of Iran's sanctions.

The bank expects Brent and WTI to average $ 85 and $ 76 per barrel, respectively, over the next six months.

Faced with high raw material prices and record lows for the rupee against the INR = dollar, Indian refiners are gearing up to reduce crude imports and instead use commercial stocks.

(For a graph on "The price of crude oil in Indian rupee", click on tmsnrt.rs/2MZPyVE)