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Oil edges off highs, but geopolitical tensions loom

Reuters  |  LONDON 

By George

LONDON (Reuters) - Oil markets edged back from highs last reached in late 2014 as ample supplies weighed, but prices were underpinned by worries over military escalation in and trade tensions between the and

Brent crude futures were at $71.70 a barrel at 0902 GMT on Thursday, down 36 cents from their last close. U.S. WTI crude futures were down 20 cents at $66.62.

Both Brent and WTI on Wednesday hit their highest since late 2014 at $73.09 and $67.45 a barrel respectively after said it intercepted missiles over and U.S. warned of imminent military action in

Analysts said the resulting geopolitical fears had pushed fundamentals aside.

"It appears that immediate supply/demand considerations stay in the background and geopolitics are in focus," said "If fundamentals were the driving force, we would not have seen the continuation of this week's rally."

Continuing concern over a prolonged trade dispute between the and also kept markets on edge.

hit out at the on Thursday, saying that threats from both sides to impose new import tariffs were provoked by and that was prepared to escalate the spat if did not back down.

The also said there had been no bilateral negotiations with the on the trade frictions.

AMPLE SUPPLIES

Despite this, supplies remain ample and analysts said this would weigh on prices eventually.

said that geopolitical events could keep Brent prices elevated above $70 in April and May, with a high likelihood of a downward correction in the second half of the year.

U.S. rose by 3.3 million barrels to 428.64 million barrels, while U.S. crude production last week hit a record 10.53 million barrels per day (bpd).

The now produces more crude than top exporter Only Russia, at nearly 11 million bpd, pumps more.

Demand, particularly in top China, was also shaky because of high stocks and refinery maintenance.

"What ultimately counts are the genuine outages on the supply side. And if these turn out not to be as substantial and lasting as feared, a more sober assessment will quickly ensue: the downside potential for Brent is very high," said

($1 = 6.2785 Chinese yuan renminbi)

(Additional reporting by Henning Gloystein in Singapore; Editing by David Goodman)

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

First Published: Thu, April 12 2018. 15:01 IST
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