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Crude ticks higher on OPEC cut extension talk; ICE Brent hits $70/b overnight, slips back to $69.02

Crude oil futures continued to tick higher in the European morning sessionFriday following comments from Saudi Arabia that the OPEC-led crude productiondeal would be extended and international trade and oil geopolitical tensions.

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At 1123 GMT, ICE May Brent crude futures were at $69.02/b, up 11 cents/b fromThursday's settle, while the NYMEX April light sweet crude contract was up 21cents/b at $64.51/b. ICE Brent hit the $70/b mark overnight for the first timesince the end of January. "Prices were boosted by comments by Saudi Arabian Energy Minister al-Falih whosaid that the production cuts could also remain in force in 2019.He alsopointed out that stocks had not yet reached their normal level," Commerzbankanalysts said in a note Friday.

The need to extend the cuts beyond 2018 indicated Khalid al-Falih did notexpect desired global inventory targets will be met by the end of the year,analysts at PVM said. The next meeting between OPEC and non-OPEC producerswill be held in Vienna in June.

Elsewhere, US President Donald Trump named John R Bolton as his nationalsecurity adviser. That greatly increased the likelihood of a US exit from theIran nuclear deal next month, according to analysts.

"Combined with the nomination of Mike Pompeo, another hawk, at the StateDepartment, most of the market will conclude that at the minimum the Iraniannuclear deal is dead," Petromatrix analysts said Friday.

The appointment accelerated the likelihood of "oil wars," Petromatrix said,which could be supportive for prices initially but, combined with trade wars,could cause a major risk to economic growth and for equity markets.

May 12 is the next deadline by which Trump has to make a decision regardingthe waiving of oil-related sanctions on Iran as part of the JointComprehensive Plan of Action.

On the trade conflict, Trump signed an executive memorandum on Thursdayinstructing Trade Representative Robert Lighthizer to levy at least $50billion of tariffs on Chinese imports.

China's Commerce ministry retaliated by saying it would levy tariffs on USimports ranging from fruit to pork to recycled aluminum and steel pipes.

"China's retaliation has added a fresh element to the tariff situation,pulling down the US dollar," IG Market Strategist Pan Jingyi said. "The lowerdollar is also helping to keep oil prices higher."

Meanwhile, analysts said the market would be watching for price cues from dataon US shale activity due for release from Baker Hughes later Friday.

--Eleni Pittalis, eleni.pittalis@spglobal.com

--Edited by Dan Lalor, daniel.lalor@spglobal.com