Oil slips from four-month highs on economic concerns



Oil has climbed over the past month, with Brent in London briefly breaking past $80 a barrel, as the impending U.S. sanctions on Iran start removing barrels from markets, and shrinking American inventories and slowing production growth raise fears over a global supply crunch. Supplies at the key storage hub in Cushing, Oklahoma, rose by an estimated 900,000 barrels last week, according to a Bloomberg forecast.

West Texas Intermediate crude for October settlement was changing hands at around $71.20 a barrel in early NY transactions, compared to $68.77 a barrel a week earlier. WTI futures gained 2.5 percent in the previous session.

Brent crude futures climbed 24 cents, or 0.3 percent, to $79.30 a barrel.

"Oil prices jumped overnight as American Petroleum Institute inventory data showed a large drawdown in inventories", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Chinese media Xinhua said the U.S. Energy Information Administration (EIA) forecast on Tuesday that U.S. crude oil production will average 10.7 million bpd in 2018, up from 9.4 million barrels bpd in 2017, and will average 11.5 million barrels bpd in 2019.

The cash-settled future will be based on a daily assessment by pricing agency S&P Global Platts for a "WAF index" backed by the four grades, each of which would carry a weighting of 25 per cent, according to a note on the ICE website, Reuters reported yesterday.The contract will be based on the differentials of the four crudes to the dated Brent benchmark and would represent 1,000 barrels of oil.

Outside the United States, traders have been focusing on the impact of USA sanctions against Iran that will target oil exports from November. This news was being supported by the unknown, or the compliance with the USA sanctions on Iran. The global record came as output from the Organization of the Petroleum Exporting Countries rose to a nine-month high of over 32 million barrels per day (mb/d).

"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.

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

"It is related to the fact that not all the countries have managed to restore their market and production", he said, referring to outages and falling production in Mexico and Venezuela. "Russia has the potential to raise production by 300,000 barrels (per day) mid-term, in addition to the level of October 2016", he said. Iranian oil exports should go from about 2.7 million bpd-2.8 million bpd from earlier this year to about 1 million bpd-1.2 million bpd by the end of this year, Sen told CNBC earlier this month.

Oil traders were also watching the progress of category 4 Hurricane Florence, which is expected to make landfall on the U.S. East Coast by Friday.

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