Oil up more than 1% on Mideast tensions and supply cuts
* Kuwait oil minister sees balanced oil market towards end
* Russia's oil production continues to fall after
* China's industrial profits shrink in April
* OPEC-led oil supply cuts provide support
(New throughout, updates prices, changes byline, dateline,
By Laila Kearney and Alex Lawler
NEW YORK, LONDON, May 27 (Reuters) - Oil prices rose more
than 1% on Monday, supported by Middle East tensions and
OPEC-led supply cuts as well as continued crude disruptions from
Russia after a contamination problem discovered last month.
Output reductions - both voluntary by the Organization of
the Petroleum Exporting Countries (OPEC) and allies, plus those
resulting from U.S. sanctions - have helped Brent crude, the
global benchmark, rise by about 29% this year.
Brent settled at $70.11, rising $1.42, or 2.07%,
after having fallen by about 4.5% last week. U.S. West Texas
Intermediate crude futures were up 59 cents, or 1%, to
$59.24 a barrel at 1:52 p.m. EDT (1752 GMT).
Public holidays in the United States and Britain on Monday
limited participation, keeping volumes low.
Tensions between the United States and Iran, with
Washington's announcement on Friday that it would deploy more
troops to the Middle East, raised the prospect of supply
disruptions and supported prices.
Some analysts said its impact could be limited.
"This move further increases tensions in the regions, but
with the U.S. and UK markets closed today and most of the
geopolitical tension likely already priced in to the market,
effects on crude prices may remain subdued," JBC Energy said in
Russia's oil production continued to fall this month, two
industry sources told Reuters on Monday, under pressure from
lower exports after shipments via the Druzhba pipeline to Europe
were found to be contaminated in April.
Falling output due to the contamination helped to tighten
the market and boost prices.
Supply reductions led by OPEC have also helped crude futures
In comments suggesting OPEC is not in a rush to ease supply
restraint ahead of a mid-year meeting to review policy, Kuwait's
oil minister Khaled al-Fadhel said the market was expected to be
"We still have some more work to do. I believe the market is
expected to be balanced during the 2nd half of 2019, more
towards the end of the year,” Al-Fadhel told Reuters.
In addition to the OPEC-led supply cuts, U.S. sanctions on
OPEC members Iran and Venezuela have curbed their crude exports,
reducing supplies further.
Brent's price structure remains in backwardation, with
prices for prompt delivery higher than those for future
dispatch, suggesting a tight balance between supply and demand.
Concerns about crude demand, however, limited gains.
"The main factor preventing the market from going higher on
the geopolitical news is really the concern about the global
economy," said Petromatrix oil analyst Olivier Jakob.
Figures on Monday showed that profits for Chinese industrial
companies shrank in April while data released on Friday showed
new orders for U.S.-made capital goods fell more than expected
(Additional reporting by Henning Gloystein
Editing by Susan Fenton and Phil Berlowitz)
First Published: 2019-05-27 02:33:05
Updated 2019-05-27 20:21:26
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