Oil steady after retreating from 2014 highs on dollar strength

Oil steady after retreating from 2014 highs on dollar strength

Oil steady after retreating from 2014 highs on dollar strength

Prices maintained support, however, from tight supply and planned US sanctions against Iran that are likely to restrict crude oil exports from one of the biggest producers in the Middle East.

Brent crude futures were at $79.40 per barrel at 0655 GMT, up 0.12 percent from their last close.

Another possible risk to the global oil supply could come from crisis-hit Venezuela, the IEA said. Saudi Arabia has indicated it could be ready to step in to meet any shortfalls arising from the U.S. sanctions against Iran.

Physical crude markets are sagging under the weight of unsold barrels of oil, while the 50-percent rise in the oil price in the a year ago is encouraging major companies such as ExxonMobil, Royal Dutch Shell, Chevron, BP and Total to increase output.

PREMIUM Global oil prices rose to their highest levels in three-and-a-half years in the aftermath of United States President Donald Trump's announcement that the U.S. will pull out of the Iran nuclear deal.

U.S. President's Donald Trump's decision to withdraw from the 2015 nuclear deal and re-impose sanctions on Iran, now a major exporter of crude, has roiled markets. "We continued to receive support from concerns about supply from the Iranian nuclear accord, Venezuela.as well as the draw in crude", McGillian said.

Further, the global oil inventories are expected to remain under pressure due to supply constraints arising from the geopolitical turmoil. That's despite consistent increases in USA production.

Brent Crude
Daily July Brent Crude

US bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020 due to a steady increase in demand.

In addition, as much as 1 million barrels of Iranian crude could be affected as U.S. sanctions on Iran are set to resume.

WTI light sweet was down 10 cents at USD71.37 a barrel at last check, off its early highs but still near a recent 4-year peak. Additionally, the IEA said although supplies now only stand at 98 million bpd due to supply cuts led by OPEC, the IEA said that "strong non-OPEC growth...will grow by 1.87 million bpd in 2018".

"Clearly the recent rise in oil prices is going to pose a problem for some central banks due to the temporary impact it will have on the inflation data, especially when you consider that in the past year, Brent crude prices are up more than 50 percent", Craig Erlam, senior market analyst at Oanda trading group, told AFP.

Goldman Sachs, though, said even with a slowdown in demand and soaring US output, global oil markets would remain tight. "World oil demand is expected to average 99.2 million barrels per day in 2018", the IEA said.

Iran is OPEC's third-largest crude producer and its output now stands at about 3.8m barrels per day, making up around 4% of global oil supply.

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