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Oil nears $80 after hitting highest since November 2014

Reuters  |  LONDON 

By Ron Bousso

LONDON (Reuters) - prices hit their highest level since November 2014 on Thursday, with creeping closer to $80 per barrel as supplies tighten and tensions with simmer.

futures rose 32 cents to $79.60 per barrel at 0846 GMT.

U.S. Intermediate (WTI) crude futures were up 29 cents at $71.78 a barrel. That was not far off Tuesday's $71.92 a barrel - also a level not seen since November 2014.

The prospects of a sharp drop in Iranian exports in the coming months due to renewed U.S. sanctions following Donald Trump's decision to withdraw from an international nuclear deal with has lifted prices in recent weeks.

France's Total on Wednesday warned it might abandon a in if it could not secure a waiver from U.S. sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.

"The geo-political noise and escalation fears are here to stay," said Norbert Rücker, of Macro & Commodity Research, at Swiss Julius Baer. "Supply concerns are top of mind after the left the nuclear deal."

Global inventories of and refined products dropped sharply in recent months due to robust demand and production cuts by the world's top producing countries.

were expected to drop further as peak summer driving season nears, offsetting increases in U.S. shale output, said analysts at

"While the sharp rise in U.S. production and rig count has raised questions on the sustainability of inventory draws through 2018, we believe that inventories will continue to draw as we enter the summer driving season in 2018," they said.

Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand.

EVERYTHING BULLISH?

But could hit consumption, the International Energy Agency warned on Wednesday, lowering its global growth forecast for 2018 to 1.4 million from 1.5 million barrels per day (bpd).

Asia's demand is at record highs and with rising prices its crude could cost $1 trillion this year, about twice what it paid during the market lull of 2015/2016.

The IEA said global would average 99.2 million bpd in 2018, although U.S. said consumption would cross 100 million bpd "this summer".

Leading production increases is the United States, where crude output has soared by 27 percent in the last two years, to a record 10.72 million bpd, putting the within reach of top Russia's 11 million bpd.

Goldman Sachs, though, said even with a slowdown in demand and soaring U.S. output, global would remain tight.

"U.S. shale cannot solve the current oil supply problems," it said, arguing that U.S. oil would not be sufficient to offset production losses from Iran, and

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

(Additional reporting by in Singapore; editing by and Jason Neely)

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

First Published: Thu, May 17 2018. 14:59 IST
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