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Oil supported as investors factor in supply risks

Reuters  |  LONDON 

By Cooper

LONDON (Reuters) - edged up on Tuesday, supported by investors' growing concern over the potential for disruptions to crude supply, especially in the

Brent futures were up 4 cents at $71.46 a barrel by 1145 GMT, while U.S. crude futures edged up 8 cents to $66.30 a barrel.

Traders said markets were receiving general support due to the risk of supply interruptions, including a potentially spreading conflict in the Middle East, renewed U.S. sanctions against and falling output in crisis-hit

"With so many potential supply disruptors in play and few signs that the current market upheaval will end any time soon, traders continue to pay the geopolitical risk premium," said Stephen Innes, at in

"Oil prices should remain bid ... at least through the nuclear deal deadline (May 12) if not for the remainder of 2018," he added.

U.S. has threatened to pull out of a nuclear deal between and six major powers by May 12 unless and European allies help "fix" it with a follow-up agreement.

If does not renew sanctions relief for at this point, Iran may have difficulty exporting its crude.

have been well supported this year, with Brent up around 16 percent from its 2018 low in February, due to healthy demand and supply cuts led by the Organization of the Petroleum Exporting Countries.

U.S. OUTPUT SOARS

Another main has been the United States, where crude production has soared by almost a quarter since mid-2016, largely thanks to a booming shale industry.

The physical markets, particularly in the Atlantic Basin, are suffering from seasonal weakness that has pulled some grades to multi-month lows.

"We've got geopolitics on the one hand, which is bullish, but I don't think fundamentals are quite as convincing as people would like to believe," said.

"I'm not saying oil won't run higher based on the situation in Syria, but I don't think this rally on geopolitics can be sustained unless it results in actual supply disruption."

U.S. is expected to increase in May for the fourth consecutive month, (EIA) data showed on Monday.

The publishes weekly U.S. fuel inventory data later on Tuesday, while official government data, including on production, is due from the EIA on Wednesday.

(Additional reporting by in Singapore; Editing by Dale Hudson/David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, April 17 2018. 17:29 IST
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