Hot Issue In Saudi Arabi Vs Iran, Crude Oil Price Strengthened

The price of crude oil on Wednesday afternoon (06/01) strengthened, but slightly backwards towards the closure of the previous session's near 11-year low positionbecause of concerns over the increasing supply exceed the tension between oil producers in the Middle East.

The tension of relations between Saudi Arabia and Iran failed to boost prices this week, because it seems to put an end to speculation that OPEC members could agree on a reduction in production to raise prices. The price of U.S. crude oil futures for February delivery rose 13 cents on the dollar per barrel, 36.10 after slipped 79 cents in the previous session.

Prices of Brent crude oil rose 12 cents to 36.54 dollars a barrel, after the shut down 80 cents. Brent 11-year lows reached on 35.98 dollars per barrel before Christmas.

"The oversupply of crude oil are still influential, but the deficit between demand and supply is getting smaller," said Daniel Ang, an analyst at Phillip Futures investment, in a note Wednesday.

Iran's oil exports are widely expected to rise in the year 2016 as Western sanction sagainst the country for its nuclear weapons program will likely be lifted.

"We don't want to start some kind of a price war," Mohsen Qamsari, Director Generalfor International Affairs of the National Iran Oil Company (NIOC), told Reuters in an interview.

The mounting concern over supply levels continue to add pressure to prices, with crude oil inventories in the United States may have increased 439,000 barrels last week, according to a Reuters poll of eight analysts.

The U.S. Energy Information Administration (EIA) will publish data on weeklysupervised strictly on a night later. Data from the American Petroleum Institute (API), an industry group, showed crude oil stockpiles fell last week by 5.6 million barrels, whereas the preparation at the point of delivery in Cushing, Oklahoma, rose 1.4 million barrels.

"The growth of demand and crude oil production of non-OPEC countries are declining slowly will stabilize (crude oil stock level) in 2016 but not substantively reduce them until 2017.0" analyst at PIRA Energy said in a note.

The oil market also faces pressure from a strengthening dollar is hovering near one-month highest level reached on Tuesday because traders seek safer hedging.