Oil markets firm as Brent edges ever closer to $80 per barrel on tight market

Reuters

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    * Drop in U.S. inventories pushes up WTI crude
    * OPEC cuts, looming U.S. sanctions against Iran lift Brent
    * But surging U.S. production could meet fall in OPEC
supplies

    By Henning Gloystein
    SINGAPORE, May 17 (Reuters) - Oil prices firmed on Thursday,
with Brent crude creeping ever closer to $80 per barrel, a level
it has not seen since November 2014, as supplies tighten while
demand remains strong.
    Brent crude futures  LCOc1  were at $79.32 per barrel at
0027 GMT, up 4 cents from their last close.
    U.S. West Texas Intermediate (WTI) crude futures were at
$71.68 a barrel, up 19 cents, or 0.3 percent, from their last
settlement.
    ANZ bank said on Thursday that Brent was "now threatening to
break through $80 per barrel ... (as) geopolitical risks
continue to support prices, (and) an unexpected fall in
inventories in the U.S. got investors excited yesterday."
    U.S. crude inventories  C-STK-T-EIA  dropped by 1.4 million
barrels in the week to May 11, to 432.34 million barrels.
 urn:newsml:reuters.com:*:nL2N1SN0YC
    ANZ said the falling U.S. inventories were "raising concerns
of tight markets heading into the U.S. driving season," during
which demand typically rises.
    Looking beyond seasonal changes, U.S. bank Morgan Stanley
said it had raised its Brent price forecast to $90 per barrel by
2020, due to a steady increase in demand.
    
    EVERYTHING BULLISH?
    Not all pointed to a tighter market, however.
    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.
 urn:newsml:reuters.com:*:nL9N1AF04H
    The IEA said global oil demand would average 99.2 million
bpd in 2018.
    And although supplies currently only stand at 98 million bpd
due to supply cuts led by the Organization of the Petroleum
Exporting Countries (OPEC), the IEA said that "strong non-OPEC
growth ... will grow by 1.87 million bpd in 2018."
    Leading production increases is the United States, where
crude output  C-OUT-T-EIA  has soared by 27 percent in the last
two years, to a record 10.72 million bpd.
    That puts the United States within reach of top producer
Russia, which pumps around 11 million bpd.
    As a result of its surging production, U.S. crude is
increasingly appearing on global markets as exports.
 urn:newsml:reuters.com:*:nL3N1SN3EJ 
    Commodity brokerage Marex Spectron said that the surge in
U.S. supplies was a "strongly price-bearish development."
    It said the economic outlook was also "firmly bearish" as
"short-term credit conditions have worsened which ... hasn't
been priced correctly by the market".
    The brokerage also said that U.S. energy intensity
"continues to decrease which is never good news for the future
consumption of oil".

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GRAPHIC: Russia vs Saudi vs U.S. oil production    https://reut.rs/2rNTili
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 (Reporting by Henning Gloystein; Editing by Joseph Radford)
 ((Henning.gloystein@tr.com; +65 6870 3263; Twitter:
@hgloystein))

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