Oil Rises to New Three-Year Highs

Oil Rises to New Three-Year Highs

Brent crude, the global oil benchmark, rose 0.3% to $78.46 a barrel on London's ICE Futures exchange.

Shortly before 1000 GMT, Brent North Sea crude for delivery in July jumped to Dollars 80.18 a barrel - the highest level since November 2014.

Saudi Arabia now enjoys a double-whammy windfall as crude oil prices may remain strong and state producer Saudi Aramco will also likely to be able to pump more oil to replace any Iranian barrels lost because of the re-imposed sanctions.

Presenting its latest monthly report, the International Energy Agency said Wednesday the decision by US President Donald Trump to withdraw from the Iran deal had "switched the focus of oil market analysis from the fundamentals to geopolitics".

This is published unedited from the PTI feed. "For the last three, four, five months we've seen high turnarounds globally", a USA crude trader said, referencing maintenance works. The feedback/reflexivity here (that results from a price maker/entity with market power using spreads/inventory as a proxy for supply-demand balance, and market participants forming expectations about how the price maker will behave) greatly complicates things.

As a result of its surging production, U.S. crude is increasingly appearing on global markets as exports.

The IEA's sentiment was driving crude oil prices lower. While European buyers flag concerns over the financing issues of trade with Iran as a potential stop to buying Iranian crude, China is reassuring Tehran that it will continue to import its oil.

RTS19KSY

The IEA said global oil demand would average 99.2 million bpd in 2018.

OPEC's supply cuts have been swamped by the increase in U.S. output, led by production from shale fields and this, along with the higher price, has made the major forecasting agencies - the IEA, OPEC itself and the U.S. Energy Information Administration - far more cautious.

U.S. crude inventories C-STK-T-EIA dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.

Non-OPEC supply this year now is forecast to grow by 1.7 million b/d y/y, with 89% from the United States. Analysts estimate anywhere from 200,000 to 1 million bpd could be cut from global exports next year. Traders say the surge in US exports to more than 2 million bpd has saturated some markets, leaving benchmark prices ripe for a correction.

If the political prospects improve in countries like Venezuela, Libya, South Sudan, and Iran, prices will fall even lower. Saudi Arabia has been condemning that Iran used economic gains from the lifting of sanctions to continue its activities to destabilize the region, particularly by developing ballistic missiles and supporting terrorist groups in the region.

OPEC production cuts and the potential of wide-reaching USA sanctions on Iran did little to prevent oil prices dipping further on Wednesday.

The bottleneck in North America likely contributed to a 4.9 million barrel rise in US crude oil inventories, to 435.6 million barrels, that the private American Petroleum Institute reported on Tuesday.

Tencent Sees Profit Increase of 61% Thanks to Games Business
But the cost of revenue in that category doubled to 11.91 billion yuan, due to subsidies and promotional expenses. He added that Tencent's WeChat ecosystem gives it a unique position to take advantage of an enlarged market.

Related Articles