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

Reuters  |  SINGAPORE 

By Henning Gloystein

SINGAPORE (Reuters) - fell on Wednesday, weighed down by ample supplies despite ongoing output cuts by producer cartel and looming U.S. sanctions against major crude exporter Iran.

futures were at $78.22 per barrel at 0644 GMT, down 21 cents, or 0.3 percent, from their last close.

U.S. Intermediate (WTI) crude futures were at $71.03 a barrel, down 28 cents, or 0.4 percent, from their last settlement.

Despite the dips, both benchmarks remained close to their November 2014 highs of $79.47 and $71.92 a barrel respectively, reached the previous day.

But there are signs in physical crude markets that may give pause to financial investors.

There are also signs that will rise, especially at majors like ExxonMobil, Royal Dutch Shell, Chevron, and Total.

"Aggregate production - both actual and projected - is growing for the majors," Global Ratings said in a report published on Tuesday.

are at their steepest discounts to futures prices in years as sellers are struggling to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in west and

The bottleneck in likely contributed to a 4.9 million barrel rise in U.S. crude oil inventories, to 435.6 million barrels, that the private American Institute reported on Tuesday.

"The inventory data in the U.S. fits with ... a topping pattern - or at least a decent pause - for at the moment," said Greg McKenna, at

fuel storage data is due for release by the (EIA) later on Wednesday.

"We expect the EIA report to display bearish results amidst higher rig counts and production levels in the U.S.," said Singapore-based brokerage

Despite Wednesday's dips and some indicators implying the has overshot physical oil, overall crude market conditions have tightened since 2017 when the Organization of the Exporting Countries (OPEC) started to withhold supplies to push up

With renewed U.S. sanctions looming against OPEC-member Iran and strong, analysts said crude markets will likely remain tight for much of the year.

Stronger oil prices are also spilling into other markets.

"A rising brings upside price risk to all commodities," said in a note to clients this week.

(Reporting by Henning Gloystein; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 12:28 IST