Oil prices snap three-day rally
NEW YORK (Reuters) — Oil prices eased slightly on Tuesday after rallying for three straight sessions, but remained close to four-year highs on worries that global supplies will drop due to Washington’s sanctions on Iran.
“This is the market catching its breath,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.
In addition to the worries that Iran, prices are being supported by global demand that has remained strong in the face of trade tensions.
Brent fell 18 cents to settle at $84.80 per barrel, a day after hitting a four-year high of $85.45. US West Texas Intermediate (WTI) crude futures were off seven cents at $75.23 a barrel, after earlier touching a four-year high of $75.91.
Analysts polled by Reuters forecast that US crude stocks rose about two million barrels last week ahead of data from industry group the American Petroleum Institute (API) due out at 4:30 p.m. and from the US government on Wednesday morning.
Crude prices have roughly tripled from lows hit in January 2016 after the Organization of the Petroleum Exporting Countries and allies led by Russia cut output.
Oil market sentiment was lifted by Sunday’s last-gasp deal to salvage NAFTA as a trilateral pact between the US, Mexico and Canada.
The US sanctions against Iran’s oil industry, which at its peak this year supplied nearly three percent of the world’s daily consumption, are due to go into effect on Nov. 4.
A Reuters survey of OPEC production found Iranian output in September fell by 100,000 barrels per day, while production from OPEC as a whole rose by 90,000 bpd from August.
“Our oil analysts believe there is now a growing risk it (crude) could touch $100 per barrel,” HSBC said in its fourth-quarter Global Economics outlook.
Many analysts say OPEC will struggle to cover a decline in exports from Iran. Britain’s Barclays bank, however, said, “OPEC has ample spare capacity.”
Soaring crude prices and weak emerging market currencies may erode economic growth.