London — ICE Brent and NYMEX WTI crude futures traded higher Monday morning in Europe after rallying over the weekend, as bullish sentiment over the last few weeks due to the anticipated impact of US sanctions on Iran and trade developments with China continued to steer the market.
At 1200 GMT, the new front-month ICE Brent crude futures contract for November was up 63 cents/b from Friday's settle at $77.42/b, while the NYMEX October light sweet crude contract rose 9 cents/b to $69.80/b.
Nets longs on ICE Brent futures increased by 64,635 lots to 389,066 lots, the latest data from InterContinental Exchange showed.
"The sentiment build-up over the past few weeks has yet to be broken. The Market is viewing the upside as the direction with least resistance," Ole Hansen, head of commodity strategy at Saxo Bank, said.
"The market is up on the day, but we may struggle to aggressively move much higher," he added after pegging the resistance level on November ICE Brent futures at $78.40/b.
Iran's crude exports have already started falling sharply as buyers source alternative supplies and halt loadings to allow time to complete deliveries before the sanctions take effect.
August figures released next week will bring the supply impact into sharper focus.
According to S&P Global Platts Analytics, 1.44 million b/d will leave the market by November, compared with April levels.
November exports of 1.47 million b/d would represent a drop of 874,000 b/d from July.
Meanwhile, US President Donald Trump has voiced his determination to go ahead with his plan to impose $200 billion in tariffs on Chinese imports.
However, Unipec, the trading arm of China's state-run Sinopec, has booked two VLCCs for loading crude from the US Gulf in September, signaling that it has not fully withdrawn from US crude market despite the threat of tariffs.
China received 14.1 million barrels of US crude in June, a historic high, which fell to 9.76 million barrels in July, data from S&P Global Platts trade flow software cFlow showed.
Elsewhere, looking at the outlook for oil prices through to the end of the year, Oman's oil and gas minister told the press that crude is unlikely to trade higher than $80/b.
