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Brent pushes above $80 a barrel after U.S. crude stock draw

Reuters  |  NEW YORK 

By Stephanie Kelly

NEW YORK (Reuters) - futures climbed on Wednesday, with Brent reaching $80 a barrel, after a larger-than-expected drop in U.S. crude inventories and as U.S. sanctions on added to concerns over global supply.

Benchmark Brent crude futures were up $1.01 at $80.07 a barrel by 10:58 a.m. EDT (1458 GMT) after reaching $80.13 a barrel, its highest since May 22.

U.S. Intermediate (WTI) crude rose $1.73 to $70.98 a barrel, a one-week high. The spread between the two benchmarks widened 7 percent in the session to $9.30 a barrel.

U.S. crude inventories fell by 5.3 million barrels in the last week, the Information Administration said on Wednesday. Analysts had expected a decrease of 805,000 barrels.

"A drawdown in crude inventories isn't very comforting when you're going to lose a lot of Iranian crude in a couple of weeks," said Phil Flynn, an at

Since spring when the said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply. The sanctions will target Iran's from November.

"is increasingly becoming the preoccupation of the crude market. The last couple of weeks have seen the expected squeeze on Iranian crude flows taking shape, with overall outflows down markedly," said.

Russian minister on Wednesday warned of the impact of U.S. sanctions against

"This is a huge uncertainty on the market - how countries, which buy almost 2 million barrels per day (bpd) of Iranian oil, will act. The situation should be closely watched, the right decisions should be taken," he said.

Novak said global were "fragile" due to geopolitical risks and supply disruptions.

The Organization of the Petroleum Exporting Countries cut its forecast for oil demand growth in 2019 in its monthly report and said rising challenges in some emerging and developing countries could negatively impact global economic growth.

OPEC said it expected demand growth of 1.41 million bpd in 2019, a 20,000-bpd downgrade from its previous forecast.

were also watching the progress of category 4 Hurricane which is expected to make landfall by Friday.

Crude output will not be affected by the "monster" storm, but the evacuation of more than a million residents, as well as businesses, has prompted a near-term spike in fuel demand.

(Additional reporting by in London and Henning Gloystein in Singapore; Editing by David Evans, and Susan Thomas)

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

First Published: Wed, September 12 2018. 21:01 IST