By Amanda Cooper
LONDON (Reuters) - Oil cut earlier losses and rose towards its highest level this year on Wednesday, after a drop in U.S. crude inventories and as the prospect of the loss of Iranian supply added to concerns over the delicate balance between consumption and production.
Brent crude futures were last up 14 cents on the day at $79.20 a barrel by 1123 GMT, having touched a session peak of $79.66, the highest since late May, when the price broke above $80.
U.S. crude futures rose 61 cents to $69.86 a barrel.
"While we aren't explicitly forecasting Brent to rise to $100 a barrel, we see real risks of this happening. The fact that much higher supply is already needed from the likes of Saudi Arabia - and the low levels of spare capacity remaining - leave the global system highly vulnerable to any further significant outage."
U.S. crude stocks fell by 8.6 million barrels in the week to Sept. 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday, while the U.S. Energy Information Administration (EIA) cut its forecast for U.S. crude output growth in 2019.
"Iran 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," consultant JBC Energy said.
"This is a huge uncertainty on the market - how countries, which buy almost 2 million barrels per day of Iranian oil, will act. The situation should be closely watched, the right decisions should be taken," he said.
Novak said global oil markets 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 expects demand growth of 1.41 million bpd in 2019, a 20,000-bpd downgrade from its previous forecast.
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 Henning Gloystein in SINGAPORE; Editing by Louise Heavens/David Evans)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)