Published: Wed, September 19, 2018
Business | By Eloise Houston

Brent crude trades near two-month high on stockpile drop

Brent crude trades near two-month high on stockpile drop

Brent rose above $80 per barrel the previous session for the first time since May, spurred by expectations that US sanctions against Iran's oil exports, which will start in November, will tighten global markets.

USA crude stocks fell last week, while gasoline and distillate inventories rose, the Energy Information Administration said on Wednesday.

Crude Oil futures in NY climbed 2.5%, while gasoline futures popped higher by 2.8% Tuesday.

Currently, a barrel of Brent oil is changing hands at $79.31, having hit a 7-day high of $79.51 yesterday. Brent crude, the global benchmark, fell $1.56, or 2%, to $78.18 a barrel to end a four-session winning streak.

"In theory, it is perfectly possible to have an increased price of oil that entirely compensates for the loss of exports".

Outside the United States, markets focused on US sanctions against Iran, which from November will target its oil sector.

Iraq replaced Saudi Arabia in August as the top oil supplier to India, the data showed, as refiners turned to Iraqi barrels to compensate for a lower intake of Iranian oil ahead of the USA sanctions in November.

But analysts say Washington's goal of reducing Iran's oil sales to zero is unrealistic.

Russian energy minister Alexander Novak on Wednesday warned of the impact the USA sanctions against Iran.

"But we are clear that these are commercial decisions-dependent on how competitively oil is priced and on the requirements of our refineries", said the official.

World oil consumption will top 100 million barrels per day (bpd) in the next three months, putting upward pressure on prices, although emerging market crises and trade disputes could dent this demand, the International Energy Agency said on Thursday.

Russian Energy Minister Alexander Novak said US trade measures against China are also contributing to the instability in the Global oil market.

"This is huge uncertainty on the market - how the countries, which buy nearly 2 million barrels per day of Iranian oil will act".

"Russia has potential to raise production by 300,000 barrels (per day) mid-term, in addition to the level of October 2016", he said.

"Second-largest producer Iraq boosted its output 90,000 bpd to 4.65 million bpd".

"World demand will average 98.82 million bpd in 2018, a demand growth of 1.62 million bpd", said S&P.

The storm is expected to make landfall on the U.S. East Coast on Friday.

Oil demand growth in 2019 is expected to rise by 250,000 bpd, a decrease from EIA's previous projection for an increase of 290,000 bpd.

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