SINGAPORE Feb 6 Oil prices edged up on Monday
on fears that new U.S. sanctions against Iran could be extended
to start affecting crude supplies, but markets were capped by
further signs of growing U.S. production.
Tensions between Tehran and Washington have risen since a
recent Iranian ballistic missile test which prompted U.S.
President Donald Trump's administration to impose sanctions on
individuals and entities linked to the Revolutionary Guards.
Brent crude futures, the international benchmark for
oil prices, were trading at $56.86 per barrel at 0037 GMT, up 5
cents from their last close.
U.S. West Texas Intermediate (WTI) futures were up 5
cents at $53.88 a barrel.
Traders said the strain between Tehran and the United States
raised concerns that U.S. sanctions could be tightened further
to impact Iranian oil exports, which were only allowed to return
to normal last year.
"The move by the U.S. to impose new restrictions on Iran for
testing a ballistic missile ... does raise the risk of further
tensions disrupting supply," ANZ bank said on Monday.
"This was countered somewhat by data showing another strong
rise in rig activity in the U.S.," it added.
U.S. energy companies added oil rigs for a 13th week in the
last 14, extending a nine-month recovery as drillers take
advantage of crude prices that have held mostly over $50 a
barrel since OPEC agreed to cut supplies in late November.
Drillers added 17 oil rigs in the week to Feb. 3, bringing
the total count up to 583, the most since October 2015, energy
services firm Baker Hughes Inc said on Friday.
The rising U.S. production, led by shale drillers, dims
efforts led by the Organization of the Petroleum Exporting
Countries (OPEC) and other producers like Russia to end global
oversupply by cutting their output by a planned average of
almost 1.8 million barrels per day (bpd) during the first half
of the year.
OPEC's efforts to shield its biggest and fastest growing
markets in Asia from the cuts are also undermining a rebalancing
of the market, traders have said, as OPEC cuts exports to
regions in Europe and North America where demand growth is
slower or where other suppliers are more dominant.
Caution over efforts so far to re-balance the market is
reflected in price movements this year.
Despite the OPEC-led cuts being enacted from the beginning
of 2017, Brent crude futures are 2.6 percent below their peaks
in early January.
(Reporting by Henning Gloystein; Editing by Joseph Radford)