Oil prices dip, but US crude remains above $70 on falling inventories

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices slipped on Thursday, although U.S. crude remained above $70 a barrel on the back of falling crude inventories and Brent was still close to $80 because of looming sanctions against Iran.

U.S. West Texas Intermediate (WTI) crude futures were at $70.19 per barrel at 0024 GMT, down 18 cents from their last settlement.

Brent crude futures dipped 11 cents to $79.63 a barrel.

Brent rose above $80 per barrel the previous session for the first time since May, spurred by expectations that U.S. sanctions against Iran's oil exports, which will start in November, will tighten global markets.

U.S. crude inventories fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said in its weekly report on Wednesday.

Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said crude inventory data for last week showed "a much deeper drop than analyst's expectations ... propelling Brent briefly above the fundamental and psychological $80 a barrel for the first time since May, and was equally as supportive for the WTI contract."

U.S. crude oil production fell by 100,000 barrels per day (bpd), to 10.9 million bpd.

Innes said the slight dips on Thursday came as rising refined product inventories, which the EIA also reported, "slightly dampened market overexuberance" as it indicated that U.S. fuel demand may be weakening.

Gasoline stocks rose 1.3 million barrels, while distillate stockpiles , which include diesel and heating oil, climbed by 6.2 million barrels, the EIA data showed.

Overall, however, Innes said "the confluence of bullish near-term signals (of) Iran sanctions and sinking U.S. crude inventories should keep oil prices supported for the remainder of the week."

(GRAPHIC: Iran oil exports to Asia - https://tmsnrt.rs/2CEzade)

(Reporting by Henning Gloystein; Editing by Joseph Radford)