Crude soars to $80 per barrel

Gladys Abbott
September 16, 2018

U.S. 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 U.S. Energy Information Administration (EIA) said on Wednesday.

More output by members of OPEC the Organization of Petroleum Countries was able to offset the seasonal declines by non-OPEC members, though supply from non-OPEC nations was up as well by 2.6 million barrels per day, led by the United States.

Still, traders said overall market sentiment was cautious because of concerns over the demand outlook amid the trade dispute between the United States and China.

After years of holding back, OPEC opened the flood gates this summer by increasing crude oil production by 278,000 barrels a day from July to August.

Brent crude, the global benchmark for oil, has been trading between $70 and $80 since April, only briefly rising above $80 in May and this week. He said it's adding a $5 to $6 premium to the price of crude oil.

Since spring when the Trump Administration said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply.

The United States and China have imposed a series of tariffs on each other's goods since May that have unnerved equity markets, while a rising USA dollar has put emerging market currencies under pressure, raising the energy bill for some of the world's largest oil importers.

The battle between the known and the unknown, between the aggressive speculators and professionals, continues on Thursday after a strong surge in prices the previous session has failed to attract enough new buyers so far today to continue the rally.

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That price range could be "tested" as the oil market enters "a very crucial period", the Paris-based agency said in its monthly report.

Russian energy minister Alexander Novak said global oil markets were fragile due to geopolitical risks and supply disruptions.

Opec and its allies will meet in Algiers this month to assess global oil markets after having agreed to increase output at their last meeting in June.

India's imports of the USA oil in August rose to a record 275,000 bpd, accounting for about six per cent of its overall purchases.

It expects demand growth of 1.41 million barrels a day in 2019, revising downwards previous projections by 20,000 bpd.

OPEC believes the non-OPEC oil supply in 2018 will grow by 2.02 Mmbpd despite making a downward revision of 64,000 Bpd from its last report, CNBC reported.

Russian energy minister Alexander Novak on Wednesday warned of the impact of USA sanctions against Iran. In August, OPEC's second-largest producer saw near-record production at 4.65 million bpd.

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