Oil Prices Rebound On Crude Inventory Draw



U.S. West Texas Intermediate (WTI) crude futures were at $71.67 a barrel, up 18 cents, or 0.3 percent, from their last settlement.

Benchmark oil contract Brent North Sea briefly hit its highest level since late 2014, breaching $80 per barrel and sparking fears it could soon hit $100, before calming later in the day.

Oil's rise to $80/bbl is stoking concerns that the price rally will erode demand, but OPEC's giants so far aren't anxious.

The price growth was prompted by the recent cuts from the Organization of Petroleum Exporting Countries and the consequences of the United States decision to withdraw from the Iran deal and to re-impose sanctions on the Islamic Republic, which could also affect the European companies working there. Venezuela could also be hit with strict sanctions in the wake of its upcoming presidential elections.

Retail gasoline prices are up 6 percent since the start of the month and, while a switch to a more expensive summer blend is contributing to the rise, the decision by U.S. President Donald Trump to walk away from the Iranian nuclear agreement was a supporting factor.

A worker walks at the Zubair oilfield in Basra, Iraq May 9, 2018.

"The API inventory data in the US fits with. a topping pattern - or at least a decent pause - for oil prices at the moment", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

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USA crude oil production has soared by more than a quarter in the last two years, to a record 10.72 million barrels per day.

Oil on Thursday touched $80 a barrel in London for the first time since 2014 as US crude inventories fell and analysts raise their forecasts for crude prices amidst renewed sanctions on OPEC member Iran.

Goldman also said the tight market left "room for OPEC to exit (its production cuts) without significant price impact".

The two ministers, in a joint statement, blamed volatility in prices on global political tensions.

"The recent jump in oil prices will take its toll", said the IEA, which advises most major economies on energy policy. Washington dropped out of that pact last week, sending oil sharply higher on the belief that Iranian supply will be curbed, when crude inventories are already falling.

The Paris-based agency revised lower its assumption for 2018 oil consumption growth to 1.4m barrels a day - from a prior estimate of 1.5m b/d - with total demand expected at 99.2m b/d.

Since the European Union is unlikely to follow the U.S.in re-imposing sanctions on Iran, the overall impact on the Persian Gulf state's exports will be "far more muted" than in the past, tanker tracker Petro-Logistics said in a note.

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