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

London (Platts)--23 Mar 2018 754 am EDT/1154 GMT

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

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

The need to extend the cuts beyond 2018 indicated Khalid al-Falih did not expect 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 producers will be held in Vienna in June.

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

"Combined with the nomination of Mike Pompeo, another hawk, at the State Department, most of the market will conclude that at the minimum the Iranian nuclear 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 regarding the waiving of oil-related sanctions on Iran as part of the Joint Comprehensive Plan of Action.

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

China's Commerce ministry retaliated by saying it would levy tariffs on US imports 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 lower dollar is also helping to keep oil prices higher."

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

--Eleni Pittalis,

--Edited by Dan Lalor,

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