U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are in a position to close higher for the third consecutive week.
The market is being supported by strong demand, ongoing production cuts from the OPEC-led deal to stabilize prices and looming U.S. sanctions against major crude exporter Iran which could lead to supply disruptions. Gains are being limited by worries over increasing U.S. production.
Early this week, 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.
Not all the news was bullish on Wednesday, the International Energy Agency (IEA) said on Wednesday that it had lowered its global oil demand growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.
The IEA also said global demand would average 99.2 million bpd in 2018. Additionally, the IEA said although supplies currently only stand at 98 million bpd due to supply cuts led by OPEC, the IEA said that “strong non-OPEC growth…will grow by 1.87 million bpd in 2018.”
Brent Crude WTI Crude Spread Widens
The spread between internationally-favored Brent crude oil and U.S. WTI crude oil continues to widen. This makes sense since the U.S. sanctions against Iraq are likely to lead to some supply disruption although we may not see the full impact of the supply reductions until November. This news is supportive…