Oil falls after U.S. output hits record

05 May, 2018, 21:53 | Author: Lora Ball
  • Loss of Iranian oil supplies will not be easily made up for- Phil Flynn

US light crude was 51 cents higher at $68.94, and was on track to gain just over 1 percent on the week.

ANZ analysts Daniel Hynes and Soni Kumari said Brent could reach US$80 a barrel by the end of this year, attributing recent strength to rising geopolitical risks and tighter global supply.

"The extent of the rally would have been significantly weaker if not for the recent tightness in the market".

The increased geopolitical risks and the recent message from the USA producers highlighting some risks to the United States supply in 2018 points to some risks to U.S. and global oil market balances in the near term.

Additionally, the latest Reuters survey of OPEC production showed it pumped around 32 million barrels per day (bpd) in April, slightly below its target of 32.5 million bpd, due largely to plunging output in Venezuela.

On Thursday, Iranian regime's foreign minister said that Trump's demands to fix the flaws in the nuclear deal were unacceptable and that Iran would not implement them. The US Department of Treasury had given guidance related to the lifting of sanction on 16 Jan 2016, the two that matter as of now are the ones related to banking and financial industry and the US efforts to reduce Iran crude oil sales.

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"You have the May 12 Iran and Trump headlines that support the market", he said.

But the May 12 deadline for US President Donald Trump to decide whether to continue waiving US sanctions against Iran was also buffeting downward pressure on prices. "Investors are anxious about supplies after Iran took a tough stance in its response to the United States", said Wang Xiao, head of crude research with Guotai Junan Futures.

European powers want to hand Mr Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting European Union.

Following the lifting of global sanctions against Iran in January 2016, the country was able to become a major oil exporter, often undercutting Saudi Arabia despite an agreement not to.

Still, growing U.S. crude supplies have been capping price gains.

Surging production in the Permian basin has continued to outpace pipeline capacity, while local refining issues have exacerbated oversupply in the region, dealers told Reuters. U.S. production also hit a new weekly record of 10.62-million bpd - putting it ahead of Saudi Arabia, the biggest Opec producer, and just below top producer Russian Federation.

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