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Oil ebbs from multi-year highs on surge in U.S. drilling, Iran sanctions opposition

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - prices on Monday fell away from last week's multi-year highs as a relentless rise in U.S. drilling activity pointed to increased output, while resistance emerged in and to U.S. sanctions against major crude exporter

Still, crude prices remained near more than three-year-highs reached last week as markets expect Iran's exports to fall significantly once U.S. sanctions bite later this year.

Brent crude futures were at $76.79 per barrel at 0229 GMT, down 33 cents, or 0.4 percent from their last close.

U.S. Intermediate (WTI) crude futures were at $70.51 a barrel, down 19 cents, or 0.3 percent.

Brent and WTI last week reached their highest since November 2014 at $78 and $71.89 per barrel respectively.

"Around a million barrels of a day is likely to disappear from global if the U.S. sanctions on bite," said Greg McKenna, at

"But it is still far from certain that they will bite in the way intended... has said it will protect its companies from U.S. sanctions, has said French Total has yet to pull out of its fields and all the while it seems the Chinese are ready to fill the void created by the U.S.," he said

The renewed sanctions come amid an already due to record Asian demand and voluntary output restraint aimed at propping up led by the Organization of the Petroleum Exporting Countries (OPEC), as well as a group of non-OPEC producers including

"The U.S. decision to end all nuclear-related sanctions waivers for Iran will smooth the re-entry of (previously) cut OPEC, non-OPEC barrels to market in 2019 (as) it will allow OPEC and to shift their narratives on production from restraint to growth, without derailing the global recovery in oil prices," BMI Research said in a note.

Markets were also held in check by a rise in U.S. drilling for new

U.S. drillers added 10 in the week to May 11, bringing the total count to 844, the highest level since March 2015, firm said on Friday.

Hedge funds and money mangers slashed their bullish wagers on U.S. crude in the latest week to the lowest level in nearly five months, the (CFTC) said on Friday, in an indicator that many are doubtful of significant further price rises.

(Reporting by Gloystein; Editing by and Kenneth Maxwell)

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

First Published: Mon, May 14 2018. 08:20 IST