Oil hits new multi-year high above $80

The Gulf Today - Business - - FRONT PAGE -

NEW YORK: Oil prices climbed above $80 a barrel on Thurs­day for the first time since Novem­ber 2014, hit­ting new multi-year highs on con­cerns that Ira­nian ex­ports could fall be­cause of re­newed US sanc­tions, re­duc­ing sup­ply in an al­ready tight­en­ing mar­ket.

The mar­ket con­tin­ued to push higher as geopo­lit­i­cal con­cerns drove trad­ing.

“We are go­ing to have re­duced sup­plies from Iran in six months and Venezuela hasn’t shown that they can stop the drop in their sup­plies,” said Gene Mcgillian, vice pres­i­dent of re­search at Tra­di­tion En­ergy.” Brent crude fu­tures reached an in­tra­day high of $80.33 a barrel be­fore re­ced­ing to $80.16 by 11:09 a.m. EDT [1509 GMT].

US West Texas In­ter­me­di­ate (WTI) crude fu­tures were up 41 cents at $71.90 af­ter also hit­ting their high­est since Novem­ber 2014, at $72.30 a barrel.

US Pres­i­dent Don­ald Trump’s de­ci­sion this month to with­draw from an in­ter­na­tional nu­clear deal with Iran and re­vive sanc­tions that could limit crude ex­ports from OPEC’S third-largest pro­ducer has boosted oil prices.

France’s To­tal warned on Wed­nes­day that it might aban­don a multi­bil­lion-dol­lar gas project in Iran if it could not se­cure a waiver from US sanc­tions, cast­ing fur­ther doubt on Euro­pean-led efforts to sal­vage the nu­clear deal.

A rapid de­cline in Venezuela’s crude pro­duc­tion has fur­ther roiled mar­kets in re­cent months.

“The geopo­lit­i­cal noise and es­ca­la­tion fears are here to stay,” said Nor­bert Rücker, head of macro and com­mod­ity re­search at Swiss bank Julius Baer. “Sup­ply con­cerns are top of mind af­ter the United States left the nu­clear deal.” Global in­ven­to­ries of crude oil and re­fined prod­ucts dropped sharply in re­cent months owing to ro­bust de­mand and OPEC-LED pro­duc­tion cuts.

Oil stocks were ex­pected to drop fur­ther as the peak sum­mer driv­ing sea­son nears, off­set­ting in­creases in US shale out­put, Bern­stein an­a­lysts said.

Sev­eral banks have in re­cent days raised their oil price fore­casts, cit­ing tighter sup­plies and strong de­mand.

Fur­ther sup­port­ing prices, Royal Dutch Shell on Thurs­day said it was halt­ing crude ex­ports from a ma­jor Nige­rian pipe­line.

On the flip-side, how­ever, high oil prices could hit con­sump­tion, the In­ter­na­tional En­ergy Agency warned on Wed­nes­day as it low­ered its global oil de­mand growth fore­cast for 2018 to 1.4 mil­lion bar­rels per day (bpd) from 1.5 mil­lion bpd.

The IEA said global oil de­mand would av­er­age 99.2 mil­lion bpd in 2018, although US bank Gold­man Sachs said con­sump­tion would cross 100 mil­lion bpd “this sum­mer”.

Lead­ing pro­duc­tion in­creases is the United States, where crude out­put has soared by 27 per cent in the last two years to a record 10.72 mil­lion bpd, putting it within reach of top pro­ducer Rus­sia’s 11 mil­lion bpd.

The re­sult has been a widen­ing difference be­tween US crude and bench­mark Brent. WTI traded at $8.20 a barrel be­low Brent on Thurs­day, the most since April 2015.

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