ibusinesslines.com
ibusinesslines.com July 20, 2018


Oil pulls back from multi-year highs on China economy fears

16 May 2018, 04:00 | Myron Mathis

Source U.S. Energy Information Administration Short Term Energy Outlook May 2018

Source U.S. Energy Information Administration Short Term Energy Outlook May 2018

Brent, the worldwide benchmark, rose as much as 1% at $79.47 per barrel around 8:30 a.m. ET.

West Texas Intermediate crude rose 26 cents to settle at $70.96.WTI´s discount to Brent was as much as $7.28, its widest since December 12 on surging US output.

Danish oil product tanker operator Torm on Tuesday said it has stopped taking new orders in Iran as a outcome of US plans to reimpose sanctions on Tehran.

"We expect the EIA report to display bearish results amidst higher rig counts and production levels in the USA", said Singapore-based brokerage Phillip Futures.

Turmoil in the Middle East and US trade sanctions against major oil producer Iran have recently supported crude.

Current estimates by investment banks that see lowered Iranian and Venezuelan supply pushing up oil prices also assume that the global-and Chinese in particular-demand growth will continue to be strong.

Source U.S. Energy Information Administration Short Term Energy Outlook May 2018
Source U.S. Energy Information Administration Short Term Energy Outlook May 2018

The data poses worries that near-record high refinery runs may be short-lived. High oil prices and low finding cost in the region which has relatively shallow wells help drive exploration in the farm belt where an average well produces 40-50 barrels-a-day over a 15-20 year life span.

Global oil supplies could be hit by the decision by the United States to pull out of the Iran nuclear deal, and also by falling production in crisis-hit Venezuela, the IEA said on Wednesday.

OPEC figures published on Monday showed that oil inventories in OECD industrialised nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

Analysts project that oil exports from Iran could be reduced by about 0.5 million barrels a day as South Korea and Japan trim their imports, said analysts for J.P. Morgan in a recent report.

"The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand", OPEC said in its report. With Japan and South Korea already indicating that they will aim to attain a waiver from the USA in order to continue buying Iranian crude, the impact of Trump's actions will rest on how far he goes in comparison with Obama's previous sanctions.




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