Oil prices slipped slightly Tuesday morning, as market players weighed geopolitical risk against rising U.S. crude exports.
Brent crude, the global benchmark, was down 0.1%, at $57.28 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.2%, at $51.79 a barrel.
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The market is "a bit worried about geopolitical issues but there is also so much crude going out of the U.S., which puts some downward pressure on prices," said Ehsan Ul-Haq, director for crude oil and refined products at Resource Economist Ltd.
Crude prices have risen over the past few weeks following an independence referendum in Iraq's northern, semiautonomous Kurdish region. The move has led to clashes with Iraqi forces retaking the oil-rich Kirkuk area, throwing into question Kurdistan's ability to export oil through Turkey and raising doubts about investments from big oil companies.
At the same time, President Donald Trump's decision not to recertify Iran's compliance with a 2015 international agreement to curb the Islamic Republic's nuclear program has also supported oil prices. Mr. Trump's decision has raised the prospect of fresh sanctions on Iran, which would likely disrupt its oil exports and reduce global supply.
"With enough geopolitical risks on the horizon, prices can find a degree of ongoing support," according to Martijn Rats, an analyst at Morgan Stanley. "With several 'hot spots' around the world, and markets tighter than they used to be, this could become an ongoing feature of the market once again," he wrote in a note.
But even with the newfound geopolitical risk premium, U.S. crude exports have ramped up as the Gulf Coast oil infrastructure has come back online following the storm season.
"The market is trying to find a new balance," explained Resource Economist's Mr. Ul-Haq.
At the same time, demand trends have largely underpinned higher crude prices. Asian demand in particular has been strong, with crude flows to India rising to a new high last month, at 4.6 million barrels a day, according to Kpler. Analysts at consultancy JBC Energy predict "even higher imports" in the last months of the year.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was flat, at $1.68 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $525.25 a metric ton, down 0.6% from the previous settlement.
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(END) Dow Jones Newswires
October 24, 2017 06:39 ET (10:39 GMT)