Oil prices dipped on Monday as a rising rig count in the United States pointed to higher production, but markets held near more than three-year highs and were on track to rise for a second consecutive month. In the US, working oil rigs rose by five last week to 825, the highest level since March 2015, according to data from General Electric's Baker Hughes energy services firm. The rig fleet has expanded throughout the entire month of April, adding a total 28.
Brent crude futures (LCOc1), the international benchmark, had dipped 50 cents or 0.7 percent, to $74.14 a barrel by 0633 GMT on the London-based ICE Futures Europe exchange. Prices climbed as high as $75.47 last week, levels not seen since November, 2014. U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $67.82 a barrel, on the New York Mercantile Exchange, down 28 cents, or about 0.4 percent, from their last settlement. Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday.
Brent prices have gained nearly 6 percent this month driven by supply concerns amid prospects of the United States withdrawing from the 2015 Iran nuclear deal.
By May 12, US President Donald Trump will have to decide whether to reestablish sanctions against Tehran- OPEC's third-largest producer. Re-imposed sanctions on Iran,would probably result in a reduction of Iranian oil exports, tightening global supplies even more.
Trump is a strong critic of the 2015 international accord reached between Iran and the five permanent members of the UN Security Council -- the United States, France, Britain, China, and Russia -- plus Germany. Under the agreement, nuclear-related sanctions put in place against Iran were lifted in exchange for curbs on Tehran's nuclear program.
Iran’s current exports are more than twice what they were before energy sanctions were eased in January 2016. China is the Persian Gulf country’s biggest customer, buying about a third of its crude exports.
“We’ll see oil fluctuating as uncertainties will persist over whether Trump will withdraw from the Iran nuclear agreement,” Vincent Hwang, a commodities analyst at NH Investment & Securities, told Bloomberg by phone in Seoul.
“Precisely what happens with Tehran's nuclear program remains the most significant driver in oil price sentiment," Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA told Reuters.
Meanwhile, OPEC-led producers' continued discipline in withholding output have kept the market well above $70 a barrel for most of this month. The price of OPEC basket of fourteen crudes stood at $71.24 a barrel on Friday, compared with $71.00 the previous day, according to OPEC Secretariat calculations.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
“There’s been no sign from Opec that they want to cap this rally,” Bill Farren-Price at Petroleum Policy Intelligence told The Financial Times.