Oil slips after United States rig count rises; Iran concerns cap downside

Oil slips after United States rig count rises; Iran concerns cap downside

Brent prices have gained almost 6 percent this month, buoyed by expectations the United States will renew sanctions.

Oil steadied on Monday, reducing early losses after Israeli Prime Minister Benjamin Netanyahu said he would make an announcement regarding the nuclear deal with Iran, later on today.

US President Donald Trump has until May 12 to decide whether to restore sanctions on Iran that were lifted after an agreement over its disputed nuclear programme.

There is a price divergence between WTI and Brent crude oil that could raise concerns with some traders, but can be explained easily so I don't think it is a major issue.

Crude has rallied this month amid heightened geopolitical tensions, and as investors await a decision on the Iran accord.

On Friday, US Secretary of State Mike Pompeo said at a news conference that Trump would exit the deal next month "absent a substantial fix". The more-active July contract closed rose 90 cents to close at $74.69.

Concerns that the US may reimpose sanctions on Iran helped underpin the markets this week as this represents a threat to supply.

OIL IS poised for a second monthly advance, propelled by the prospect of a disruption in Iranian supplies and as Opec closes in on its target of wiping out a global glut.

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West Texas Intermediate crude for June delivery traded at US$67.48 a barrel on the New York Mercantile Exchange, down 62 cents, at 8.23 am in London.

"Although the overall USA oil rig count rose by five, the prolific Permian region saw oil rigs decline by one", Anthony Headrick, energy market analyst and commodities futures broker at CHS Hedging LLC, said in an email.

But while USA producers are accelerating shale drilling in areas in the United States, higher production has not necessarily translated into stronger refining results for some oil companies.

Buyers were pressing for lower levels in part because of good availability of crude in Europe and the US and a wide gap between Brent and the US WTI benchmarks. "We therefore see oil prices as being well supported".

Angola, once Africa's biggest crude producer, is suffering sharp declines at under-invested offshore fields, with output dropping nearly three times as much as the nation pledged in an accord with fellow Opec members.

According to General Electric's Baker Hughes energy services firm, USA drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest level since March 2015. Investors are assessing if surging USA production, which has topped 10 million barrels a day every week since early February, will undermine efforts by Opec to balance the market via output cuts.

US crude's discount to Brent hit its widest since December 28 at $6.74 a barrel.

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