Brent oil stabilises near $72 as economic concerns weigh

Brent oil stabilised near $72 per barrel on Monday after several weeks of decline, weighed down by concerns over slowing global economic growth but supported by an expected fall in supply from Iran due to U.S. sanctions. Brent crude futures (LCOc1), a benchmark for international oil prices, were at $72.08 per barrel at 1336 GMT, up 25 cents.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were up 6 cents at $65.96 per barrel. Last week, Brent declined for a third consecutive week, while WTI fell for a seventh week due to concerns about a slowdown in economic growth because of U.S.-Chinese trade tensions and weakness in many emerging economies. China and the United States will hold trade talks this month in a bid to resolve an escalating tariff war that threatens to engulf all trade between the world’s two largest economies.

Still, White House economic adviser Larry Kudlow warned Beijing not to underestimate President Donald Trump’s resolve in what Kudlow called a “battle to eliminate tariffs and non-tariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology”. “Disappointing industrial data out of China along with concerns over emerging market economies centred on Turkey weighed on commodities,” Edward Bell of Emirates NBD bank said in a note on Sunday.

In the United States, energy companies last week kept the oil rig count (RIG-OL-USA-BHI) unchanged, according to the Baker Hughes services firm as weaker oil prices temper the pace of U.S. production growth. Meanwhile, hedge funds cut their bullish positions in oil and refined fuels to the lowest level for almost a year

Traders said U.S. sanctions against Iran were supporting prices. The U.S. government has introduced financial sanctions against Iran which, from November, will also target the petroleum sector of OPEC’s third largest producer. On Monday, Iran asked the EU to speed up efforts to save a 2015 nuclear deal between Tehran and major powers.

Most EU companies have pulled out of Iran for fear of U.S. sanctions and Tehran said France’s Total had officially exited Iran’s South Pars gas project. “We continue to believe that despite all of the political goodwill that may exist in Europe, there is no practical way that many of the sizeable European buyers of Iranian crude can be protected from U.S. sanctions,” JBC Energy said in a note.

However, China signalled it wanted to continue buying large volumes of Iranian oil despite U.S. pressure and was now switching to Iranian tankers to skirt U.S. sanctions on ship insurers. Reuters\Yahoo