Crude settled at the highest since 2014 as shrinking US oil gasoline and diesel stockpiles signaled tightening global supplies
Rising crude prices will restrain oil demand growth, the International Energy Agency said, just as the body warned of a price spike due to a potential "double supply shortfall" from Iran and Venezuela.
Worldwide benchmark Brent crude for July delivery fetched around $78.25 per barrel in late London session on Wednesday, compared with $77 around the same time last week. It stood at $79.39 as of 8:20 pm Nigerian time.
"The strength of gasoline, which made new highs, a 3-1/2-year high today. helped pull up crude later in the session", said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
U.S. West Texas Intermediate (WTI) crude futures were at $71.67 a barrel, up 18 cents, or 0.3 percent, from their last settlement. Among current difficulties are new U.S. sanctions imposed on Iran after country presided by Donald Trump was released from nuclear agreement signed in 2015; The low production of Venezuela that International Energy Agency (IEA) has warned in its monthly report that is of "main challenges" for price of crude oil; The escalation of tension in Arab region and new clashes with North Korea.
"The geo-political noise and escalation fears are here to stay", said Norbert Rucker, Head of Macro & Commodity Research, at Swiss bank Julius Baer.
"Supply concerns are top of mind after the United States left the Iran nuclear deal", said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd.in Zurich.
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Meanwhile, global inventories of oil have dropped sharply in recent months on robust demand and production cuts by top producing nations.
"The import and export situation in reality has still not freed up but maybe we can see something now the long-awaited decision has been revealed", said the source in Asia.
Crude prices have received broad support from voluntary supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) aimed at tightening the market.
USA bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020 due to a steady increase in demand.
On Wednesday, the U.S. Energy Information Administration reported that U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels. "Solid oil demand, reduced OPEC output and geopolitical developments continue to underpin price gains", said the IEA. "In short, it feels that fundamentals have found a bit of balance, although firmer indications of the impact of renewed sanctions on Iran may well change the picture".
Over the last three years, the two countries have been a seesaw of production.
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