Published: Wed, May 16, 2018
Money | By Armando Alvarado

Oil hits highest price in three years

Oil hits highest price in three years

And reports suggest markets anticipate a sharp fall in Iranian crude supply once US sanctions bite later this year.

Global benchmark Brent crude futures for the July delivery rose by 0.8 percent to $78.93 per barrel, marking a new high after hitting a 3-1/2 year high of $78.53 during the previous session.

USA crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon.

Essentially, there is the Oil Price Fundamental Daily Forecast - OPEC Says Global Supply Glut Virtually Eliminatedthreat of increased US production.

Inventories at Cushing, Oklahoma, the delivery point for USA crude futures, fell about 410,000 barrels between May 8 and May 11, said traders, citing data from market intelligence firm Genscape.

Despite these downward forces, the market retains support from OPEC and other producers' production cuts and USA sanctions on Iran. China's crude oil imports in the first quarter increased by 7 percent on the year to around 9.09 million bpd-a rise of nearly 595,000 bpd on average compared to Q1 2017, according to Reuters calculations.

OPEC on Monday reported it's cutting production by more than is required.

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Rosneft's total average daily hydrocarbon production was at 5.71 million barrels of oil equivalent in the first quarter, close to levels in the same period previous year.

"The loss of Iranian barrels could tighten supplies of Middle Eastern medium-sour crudes and be supportive of Dubai oil, as traders watch for any response from other Gulf producers".

China is crucial to global oil demand growth, and if it keeps its current growth pace, it would support the strong demand growth that analysts expect.

"It is too soon to say what will happen this time, but we should examine whether other producers could step in to ensure an orderly flow of oil to the market and offset a disruption to Iranian exports", the agency said.

The main goal of the supply deal was to reduce excess oil stocks to the five-year average.

Final data for the country's April crude imports data will be released by state-run Korea National Oil Corp (KNOC) later this month.

"The API inventory data in the USA fits with. a topping pattern - or at least a decent pause - for oil prices at the moment", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

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