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Oil price holds steady as supply risks loom
OIL was steady near US$70 a barrel as supply risks from Saudi Arabia to the UK threaten to strain global markets.
Futures in New York were little changed after climbing 2.1 per cent Monday, the biggest gain in more than a month.
A strike hit production at Total SA's three oil fields in the North Sea, and concerns remain over Saudi Arabia's suspension of crude shipments through a key sea transit route following attacks by Yemeni rebels.
Crude is poised for the biggest monthly loss in a year as simmering trade tensions between the US and China pushed prices lower at a time when American shale output continues to surge.
Still, falling production due to economic woes in Venezuela, a civil war in Libya and impending American sanctions on Iranian oil have raised fears over a global supply crunch.
Barclays warned of "significant upside risk" for prices as sanctions begin to bite Iranian exports.
Meanwhile, President Donald Trump said Monday he would meet his Iranian counterpart without preconditions following a war of words earlier this month. The White House appeared to quickly walk back on his comments and signalled the US will end sanctions on Iran if the Islamic Republic's behaviour changes.
Satoru Yoshida, a commodity analyst at Rakuten Securities Inc in Tokyo, said: "A strike in the North Sea, along with persisting concerns of supply disruptions from Libya and Venezuela to Iran, is one of the factors boosting oil prices.
"While we have some bearish factors, including rising US oil production, a trade war between the US and China isn't drastically escalating, and that sense of relief is supporting prices."
West Texas Intermediate crude for September delivery traded at US$69.87 a barrel on the New York Mercantile Exchange, down 26 cents, at 8.19 am in London. The contract is on course for a 5.8 per cent decline this month, which would be the biggest such drop since August 2017.
Total volume traded was about 37 per cent below the 100-day average. Brent for September settlement, which expires Tuesday, fell 24 cents to US$74.73 a barrel on the London-based ICE Futures Europe exchange.
The contract is down 5.9 per cent this month. The more-actively traded October contract lost 25 cents to US$74.72. The global benchmark traded at a US$4.86 premium to September WTI. Futures for September delivery climbed 0.7 per cent to 513.2 yuan a barrel on the Shanghai International Energy Exchange. The contract added 0.6 per cent on Monday.
Mr Trump said at a press conference he would be willing to meet Iranian President Hassan Rouhani about a week after he warned of unspecified "consequences" if the Persian Gulf nation continues threatening the US.
Still, hours after Mr Trump's comments, Secretary of State Michael Pompeo laid out preconditions for the meeting between US and Iranian leaders. Meanwhile, the risk of potential supply disruptions elsewhere remain.
Saudi Arabia's tankers altered course after the kingdom last week took the extraordinary measure of temporarily halting oil shipments via the Bab el-Mandeb Strait, a key shipping lane for crude at the southern tip of the Red Sea. The move came after the kingdom said two tankers were attacked by Yemen's Houthi militia.
In the British North Sea, workers started shutting down production at Alwyn, Dunbar and Elgin fields ahead of industrial action that was scheduled to begin on Monday.
No talks are currently planned with Total, which operates the fields, said union regional officer Wullie Wallace.
In other oil-market news: US inventories are forecast to have fallen by three million barrels last week, according to a Bloomberg survey of analysts before government data due Wednesday.
Stockpiles at the Cushing storage hub in Oklahoma decreased 500,000 barrels in the week ended July 27, according to forecast compiled by Bloomberg. Barclays maintained its estimate of disruption to Iran's crude exports at about 700,000 barrels a day. BLOOMBERG