News Code : 43530

Crude oil futures extended gains in mid-afternoon trade in Asia Friday following the news of a Suezmax tanker catching fire and spilling oil after being hit by a "foreign object" near Jeddah.

Petrotahlil :At 3:12 pm in Singapore (0712 GMT), ICE Brent December futures were up $1.23/b (2.08%) from Thursday's settle at $60.33/b, while the NYMEX November light sweet crude futures contract was $1.04/b (1.94%)higher at $54.59/b.

"The ship laden with 1 million barrels of crude was hit by an object which could be a missile or a mine and this has resulted in an explosion that is causing an oil spill," a market source tracking the tanker market told Platts.

According to Al Jazeera, the National Iranian Tanker Company said on Friday that the hull of the ship sustained two separate explosions about 100km (60 miles) off the Saudi port city of Jeddah.

"Brent crude can be seen breaking past the $60 handle, one aided by supply concerns with the tanker explosion off the coast of Saudi Arabia," IG's market strategist Pan Jingyi said.

"The potential for this latest incident to be a terrorist attack packs the potential for prices to be affected in the near term," Pan added.

"I believe that the primary driver of crude price now is the tanker incident off Jeddah...people are pricing in the explosion, which explains the boosted sentiments," Benjamin Lu, investment analyst at Phillips Futures, said.

Meanwhile, reports that OPEC have not ruled out deeper output cuts if demand concerns linger.

OPEC, Russia and their allies have not ruled out deeper oil output cuts ahead of the OPEC meeting in Vienna come December 5-6, OPEC secretary general Mohammed Barkindo said Thursday.

"All I can tell you at the moment, all options are open," Barkindo said in a press briefing on the sidelines of an industry forum in London. "Going towards December, when we reconvene, the [OPEC /non-OPEC coalition] we will take appropriate strong positive decision that will set us on the path of heightened sustainability.", he added.

On that note, Russian President Vladimir Putin assured Barkindo that Russia , which has not always complied with its production quota, is staying on board with the current supply pact. 

"Jawboning aside, it reaffirms OPEC+ position and supply discipline to do what is necessary to support oil prices that have been severely undermined by slowing global growth," said Stephen Innes, market strategist at AxiTrader.

In addition, optimism of a partial trade deal in the US and China trade talks also supported market sentiment. US President Donald Trump said that the talks with China went "very well" and will be meeting Chinese Vice Premier Liu He again on Friday.

Market participants will keep an eye out on the Baker Hughes rig count data, an early indicator of future US crude oil production, set to be published later Friday.

As of 0712 GMT, the US Dollar Index was 0.09% lower at 98.320.

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