May 27, 2018

Oil dips on signs of ample supply despite OPEC cuts, Iran sanctions

16 May 2018, 12:42 | Simon Arnold

Oil dips on signs of ample supply despite OPEC cuts, Iran sanctions

Oil dips on signs of ample supply despite OPEC cuts, Iran sanctions

U.S. West Texas Intermediate crude oil was up 28 cents, at $70.98/Bbl, remaining below last week's 3½-year high of $71.89/Bbl, Kallanish Energy reports.

Concerns over the impact of U.S. re-sanctioning on Iran apart from other factors like economic crisis in Venezuela are keeping the oil prices high.

The supply is greater in the U.S. were production has now seen a large increase in production bringing the total of barrels produced per day to 10.7m.

Oil price steadied below a three-and-half year highs yesterday as resistance emerged in Europe and Asia to United States sanctions against major crude exporter, Iran.

World oil prices have surged by more than 70 percent over the past year as demand has risen sharply but production has been restricted by the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and other producers including Russian Federation.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

The data poses worries that near-record high refinery runs may be short-lived.

Since the accord was reached at the end of 2016, oil prices have climbed to their highest in almost four years to exceed $77 a barrel, up from $30 in early 2016.

Greg McKenna, chief market strategist at futures brokerage AxiTrader, said, "Around a million barrels of oil a day is likely to disappear from global oil markets if the United States sanctions on Iran bite".

Oil rallied this month to the highest since 2014 as tensions in the Middle East escalated and after US President Donald Trump withdrew from a 2015 accord that had curbed Iran's nuclear program in exchange for sanctions relief. As the dollar strengthens, investors can retreat from dollar-denominated commodities like oil.

US crude is trading at a hefty discount to Brent, the worldwide marker, thanks to sharp rises in USA production to 10.7 million bpd, which has left the American domestic oil market well supplied.

Rosneft's total average daily hydrocarbon production was at 5.71 million barrels of oil equivalent in the first quarter, close to levels in the same period previous year.

This story has not been edited by Firstpost staff and is generated by auto-feed.

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