Published: Thu, May 17, 2018
Finance | By Claude Patterson

Oil prices hit record high

Oil prices hit record high

However analysts at Goldman Sachs said that even with such a slowdown, and rising United States shale production, supply problems would remain - pointing to production losses in Iran as well as Venezuela and Angola. "With the dollar strengthening, higher oil prices and softening economic growth, we see a threat to demand growth from 2019", BMI Research said on Thursday.

Oil fell on Wednesday ahead of an anticipated rise in USA crude inventory that could provide more evidence that demand may be slowing in spite of ongoing crude output cuts by producer group Opec and imminent United States sanctions against Iran.

Oil is priced at $70.05 for WTI, Brent is selling for $78, and Basra Light is going for $74.46.

More figures on USA oil output will be released separately by the EIA and International Energy Agency on Wednesday. U.S. WTI futures were also up, gaining 0.36 percent to trade at $71.75 per barrel.

Spot crude oil cargo prices are at their steepest discounts to futures prices in years as sellers struggle to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in West Texas and Canada. The inventory surplus has vanished, and more outages could push oil prices up even higher.

"If there is a large shortfall in Iranian exports then clearly that will have an impact on a market that is already quite tight", he said.

Besides lowering its demand outlook, stronger prices also prompted the IEA to increase estimates for supply from Opec's rivals, particularly the US.

The direction of oil prices is highly dependent on OPEC's decision at its meeting next month and its actions the rest of the year.

Markets are treading carefully around uncertainty over Iran's supply, however, and signs of ample supply kept a lid on price rises Wednesday.

Crude inventories fell by 1.4 million barrels in the week to May 11, compared with expectations for a decrease of 750,000 barrels.

US President Donald Trump last month accused OPEC of "artificially" boosting prices, putting pressure on producers to cool the market and in turn drawing a rebuke from some OPEC members.

Opec's Arabian Gulf producers and Russian Federation have about 1.3 million barrels a day of output idle, more than the 1.2 million barrels a day of Iranian exports that were lost when sanctions were previously imposed in 2012, according to the report.

The API reported a bigger than expected build in Crude supply as refinery maintenance and glitches and talk of more oil released from the Strategic Petroleum Reserve is the likely culprit the supply increase. The call on OPEC crude and stockpiles will average around 32.25 million barrels a day for the remainder of 2018, about 600,000 higher than April output. Gasoline stocks were down (-3.8m vs. -1.4m expected) while distillate stocks (-0.1m vs. -2.4m expected) were also down. The high price of Brent is attracting USA exports.

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