Prices stay strong but just off recent highs

Despite putting a proposal forward for an enhanced Iran nuclear deal, French President Macron said he expected President Trump to pull out of the deal.

West Texas Intermediate was up about 1% to $68.70 a barrel at 8:45 a.m. ET.

The American Petroleum Institute (API) on Tuesday reported a buildup of 1.099 million barrels of the United States crude oil inventories for the week ending April 20.

Recent US-led air strikes on Syria have also contributed to the price rally but analysts are suggesting that oil could climb higher but President Donald Trump's decision on the Iran nuclear deal on May 12 could be a deciding factor.

Oil rose on Thursday, supported by expectations of renewed us sanctions on Iran, declining output in Venezuela and ongoing strong demand. Plunging Venezuelan output and looming USA sanctions against Iran come against a backdrop of strong demand, especially in Asia, the world's biggest oil-consuming region.

"We think at least 250,000 to 350,000 barrels of Iranian crude (a day) could be at risk of disruption if sanctions are brought back into place", said Ehsan Khoman, a strategist at financial group MUFG.

The EIA yesterday reported that US drillers had produced an average 10.586 million barrels daily in the week to April 20, a record-breaking production rate.

By Henning Gloystein SINGAPORE Petroleumworld 04 25 2018

The other supply constraint is that "midstream pipelines connecting Canadian oil sands to Cushing (US WTI delivery point) and Permian basin to the US Gulf coast are both operating at near-full capacity utilisation" and the situation is unlikely get better until new projects get completed in 2019.

At 429.7 million barrels, USA crude oil inventories are in the lower half of the average range for this time of the year.

Dutch bank ING said "the wide discount for WTI to Brent saw exports rising 582,000 bpd week-on-week to a record high of 2.33 million bpd".

The soaring USA output has made WTI crude around $6 per barrel cheaper than Brent, the global benchmark for oil prices.

Last week's unusual diesel exports are more likely an anomaly than a trend: As the USA continues to ramp up output of light, sweet, Texas oil, refiners' ability to pump out diesel will be threatened, and the US will soon face a shortfall, Fitch's BMI Research analysts said Wednesday in a note.

"Market sentiment is turning increasingly bullish towards the commodity", said Lukman Otunuga, research analyst at futures brokerage FXTM.

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