Oil extends longest quarterly rally in a decade on supply risks

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Exchange data shows hedge funds' combined net long position in Brent and US light crude futures and options at its largest since late July, equivalent to about 850 million barrels. The world now consumes about 100 million barrels a day of oil despite worries that electric cars and a rising trend toward renewable energy sources might one day reduce oil consumption.

Oil extended gains near the highest level in nearly 4 years as investors grapple with doubts over OPEC's ability to replace falling exports from Iran.

Others question whether the kingdom is willing to increase production enough to act as a cap on prices or bring them back down below $80, despite political pressure from the United States. The sanctions forbid oil-importing countries and companies from buying Iranian crude, so this could put a squeeze on overall global supplies and make the commodity costlier. "We want them to stop raising prices".

She said, "New alliances - even among countries not necessarily known as allies or friends-have become easier to forge as US administration has increasingly alienated many of its trade partners and traditional allies, either by protectionist position on trade or weakened commitment to multilateral institutions, including trade alliances and North Atlantic Treaty Organisation".

"If Chinese refiners do comply with USA sanctions more fully than expected, then the market balance is likely to tighten even more aggressively", Emirates NBD analyst Edward Bell wrote in a note.

U.S. West Texas Intermediate (WTI) crude futures were up 24 cents, or 0.3 percent, at $75.54 a barrel. It also reported a build of 1.53 million barrels in total gasoline inventories, while the market was expecting a draw of 100,000 barrels.

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OPEC and oil traders are now in fundamental disagreement about the market outlook and the standoff is fuelling a sharp rise in prices that could spell trouble for the global economy over the next 18 months.

Oil prices have historically declined in the last three months of the year as refinery maintenance season feeds concerns over demand for crude, but this fourth-quarter period may prove to be the exception to the norm.

The expectations of still-strong demand for oil come as U.S.

In the last few weeks, however, oil prices have been climbing, with the gains attributable a number of factors, according to Jeff Klearman, portfolio manager at GraniteShares, a New York-based exchange-traded fund issuer. The price differential between WTI and Brent contracts widened and hit 9.47 dollars on Friday.

The oil market cycles between periods of over- and under-supply.

Where OPEC is anxious about the potential for a slowdown in oil consumption growth as a result of rising prices and a possible downturn in the global economy, traders are more anxious about the impact of sanctions on Iran.