Oil prices trade with caution as Brent lowers at $71

The Delta Kanaris tanker enters the Naftoport in Gdansk Poland. Crude may be about to surge says JP Morgan. Dominik Kulaszewicz  EPA

The Delta Kanaris tanker enters the Naftoport in Gdansk Poland. Crude may be about to surge says JP Morgan. Dominik Kulaszewicz EPA

Missile strikes against Syria, inflicted on April 14 by the U.S., France and Britain, did not impress the market, although hypothetically this factor should contribute to the revival of the demand for black gold, since conflicts in the Middle East usually have an impressive influence on the mood in the raw material segment due to the volumes produced and exported in this region of oil.

Oil pumping facilities are seen at Venezuela's western Maracaibo lake in Venezuela, November 5, 2007.

Oil prices rose on Tuesday amid worries that there could be a high risk of disruptions to supply, especially in the Middle East.

Kelly went on to say that $70 as a price ceiling "doesn't hurt US consumers too much; it's a price that is actually helping out the stock market, helping out USA energy companies".

Brent crude oil futures were up 10 USA cents at US$71.52 a barrel by 0907 GMT, while U.S. crude futures gained 9 United States cents to US$66.31 a barrel.

Andrew Sheets, chief cross asset strategist at Morgan Stanley, told Bloomberg television that now the market is in the midst of a season that tends to support prices in addition to geopolitical tension; but he believes in the longer term the demand for crude will decline due to the rise of alternative energy, and "the supply of oil is also probably going to be declining, because companies have cut back enormously on their capital expenditures, and oil is increasingly hard and expensive to find".

Oil steadied on Tuesday as investors took profit on last week's rally above three-year highs, with prices supported by growing concern over the potential for supply disruptions.

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Fund managers hold more Brent futures and options than at any time since records began in 2011, according to data from the InterContinental Exchange.

Investors added to their bullish position, which is now almost equal to 640 million barrels of oil in past 9 months.

Backwardation makes it profitable to retain a bullish position in oil futures.

Traders said markets in Asia began cautiously after the weekend strikes, while oil markets also came under pressure from a rise in USA oil drilling activity.

"That's a price that I don't think is hurting USA consumers too much", Kelly said, adding that $70 oil is a price that's actually helping the stock market and US energy companies.

Despite this, Brent is still up more than 16 percent from its 2018 low in February.

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