New York — Crude oil futures moved higher in late morning New York trade as record US refining demand shows no sign abating and amid a backdrop of geopolitical tensions.
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At 1545 GMT, ICE October Brent crude futures were up $1.48/b from Thursday's settle to $76.21/b, while the NYMEX October light sweet crude contract had gained $1.30 to $69.13/b.
"With oil strikes and US refining demand nearing record, oil is breaking out. With the US maintenance season [ahead], strong signs of [crude demand] not slowing down, it is clear that the normal drop in crude demand might not be as large as in years past," said Price Group analyst Phil Flynn in a morning research note.
"While oil products are seeing a counter seasonal increase, it is clear by the crack spreads that the market is signaling that demand for oil products will continue to be strong," he added.
US refineries ran at 98.1% of capacity for the last two weeks ended August 17, Energy Information Administration data showed.
Geopolitical concerns remain background themes, with concerns about how Iran crude sanctions will impact supply when they are enacted in November and the state of the seemingly unproductive China-US trade talks remain, along with a US judge's ruling giving creditor Crystellex the right "to attach all shares of stock and any other assets or rights incident to that stock ownership belonging or owing to Petroleos de Venezuela. SA."
Analysts at Commerzbank said in a note Friday: "The subject of Iran is also continuing to keep the oil market on tenterhooks even though it is still not clear how sharply Iranian oil exports will ultimately decline as a result of US sanctions."
However, Commerzbank added that "a tense geopolitical backdrop coupled with looming Iranian supply shortages has set a floor beneath oil prices."
Trade talks on Thursday to address the US-China trade dispute proved fruitless, with China implementing a second round of retaliatory tariffs on US goods.
And it is unclear how the ruling in favor of the Canadian mining company will play out, but it is gives Crystellex control over Venezuelan oil operations, including its US refining arm, Citgo.
Meanwhile, strikes at three of Total's North Sea oil fields -- Alwyn, Dunbar and Elgin -- are imminent, as talks between Total and the Unite trade union broke down Thursday.
The French oil company will now move to consultations with individual workers, it said. Tensions escalated due to Total's purchase of Maersk Oil this year, which resulted in variations in contracts among workers.
The market, meanwhile, is looking to the Baker Hughes rig count data to be published later Friday as an indicator of US crude upstream activity and thus future production.
--Janet McGurty, firstname.lastname@example.org
--Edited by Derek Sands, email@example.com