Oil prices returned to the upward trend on Thursday, with Brent topping the $75 mark for the first time in nearly six months, as analysts weighed the impact of U.S. attempts to shut down Iranian crude exports.
New York-traded West Texas Intermediate crude futures gained 25 cents, or 0.4%, at $66.14 a barrel by 7:58 AM ET (11:58 GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 62 cents, or 0.8%, to $74.28, topping the $75 psychological level for the first time since Oct. 31.
U.S. crude took a small hit on Wednesday after data showed that oil inventories stateside surged more than expected last week.
But bulls were back on Thursday, betting that the cancellation of U.S. waivers for sanctions on Iranian oil would add to OPEC-led efforts to tighten global supply, pushing prices higher.
“As Iranian oil exports drop, prices will rise. The question, of course, is: how much?,” said Ellen Wald, oil market analyst and energy policy consultant who also authors a weekly column for Investing.com.
Among the key factors to consider, she highlighted how much pressure the U.S. can put on Saudi Arabia to increase output and the strength of the kingdom’s resistance.
Outside of sanctions, Wald emphasized that Russia was also looking to increase production this summer when the current production cut agreement ends.
“When OPEC and its non-OPEC partners meet in Vienna at the end of June, it is possible that the production agreement could fall to shambles,” she warned. “In that case, many producers will feel pressure to put as many barrels as they can on the market—a move that will drive prices down.”
To the contrary, Wald suggested that OPEC and Russia could “maintain quotas with only a modest increase in production, and that would keep prices from soaring too high or going too low.”
Adding to bullish sentiment on Thursday, Reuters cited traders who said Brent was receiving support from a halt of piped Russian oil exports to Poland and Germany due to quality concerns.
In other energy trading, gasoline futures rose 1.0% at $2.1507 a gallon by 7:59 AM ET (11:59 GMT), while heating oil advanced 0.7% to $2.1125 a gallon.
Lastly, natural gas futures traded up 0.3% at $2.507 per million British thermal unit./Investing.com