Oil Holds Near October High on Strength in Middle East Markets

(Bloomberg) -- Oil steadied near its highest level in almost three months, after some Middle Eastern oil grades strengthened on robust demand from Asian refiners.

Brent traded near $76 a barrel after earlier Monday hitting its highest since Oct. 14. West Texas Intermediate was around $74. Traders will be looking out for official selling prices from Saudi Arabia, the biggest exporter, after Oman and Dubai crudes jumped at the end of last year on scant supply from Iran and Russia.

Oil “appears to be driven by the Middle East physical market,” said Warren Patterson, head of commodities strategy at ING Groep NV. “Lower flows from Iran and Russia have pushed Asian buyers to look for alternatives.”

Oil last week followed bullish drivers — including falling US stockpiles and increased unpredictability as Donald Trump prepares to return to the White House — to break out of a narrow range it had traded in since mid-October. That optimism is being pared by expectations for a glut, the possible revival of idled OPEC+ production and lackluster demand from top importer China. 

Brent is “likely anchored around $70,” Morgan Stanley analysts including Martijn Rats said in a note dated Jan. 5. The bank forecasts a surplus of about 700,000 barrels a day this year, as rising supply from OPEC and producers from outside of the group outpaces demand growth. 

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