Published: Fri, September 14, 2018
Finance | By Loren Pratt

Oil slips from four-month highs on economic concerns

Oil slips from four-month highs on economic concerns

The upturn in oil prices come as the United States' sanctions squeezed Iranian crude exports and after the U.S. crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns.

China has said that it would not stop buying Iranian oil, but Beijing is also said to have agreed not to increase its oil purchases from Iran.

Oil traders were also watching the progress of category 4 Hurricane Florence, which is expected to make landfall in the U.S. by Friday.

Brent crude futures rose US$1.69, or 2.2 percent, to settle at US$79.06 a barrel.

US crude stocks fell 5.3 million barrels in the week to September 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 US Energy Information Administration (EIA) said on Wednesday.

USA sanctions on Iran's energy industry, which come into force in November, have already cut supply back to two-year lows, while falling Venezuelan output and unplanned outages elsewhere will also keep the balance between supply and demand tight, the IEA said. "The situation in Venezuela could deteriorate even faster, strife could return to Libya and the 53 days to November 4 will reveal more decisions taken by countries and companies with respect to Iranian oil purchases", the IEA said, referring to the day US sanctions on Iran take effect. South Korea says that it continues talks with the United States to see if it can obtain waiver.

"The price range for Brent of $70-$80 per barrel in place since April could be tested".


The Economic Times (ET), an Indian daily said Iran now exports about 2 million barrels a day which is already 28% less than what they used to export in April.

The Wall Street Journal said OPEC's total oil production climbed last month, in a sign the oil cartel is sticking with a decision to begin pumping out more barrels of crude this summer after more than a year of holding back output.

EIA revises down US crude oil output expectations.

But it said rising demand could also be checked.

In 2018, demand for OPEC crude is expected at 32.91 million bpd, with demand for the second half to average 33.50 million bpd, the monthly market report showed.

Combined output by these three producers has risen by 3.8 million bpd since September 2014, more than the peak 3 million bpd Iran has managed during the last three years.

WTI was pushed over $70 during the previous session due to falling crude inventory and production levels.

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