Oil eases, but Iran sanctions keep Brent above $80 a barrel

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices fell on Wednesday after U.S. data showed a surprise rise in domestic crude stockpiles, but a looming drop in Iranian exports kept Brent futures above $80 a barrel and on track for a fifth straight quarterly gain.

Global benchmark Brent fell 53 cents to settle at $81.34 a barrel. On Tuesday, Brent rose to $82.55, the highest since November 2014.

U.S. West Texas Intermediate (WTI) crude futures lost 71 cents to settle at $71.57 a barrel.

US crude oil inventories rose by 1.9 million barrels in the week to September 21, according to data from the US Energy Information Administration (EIA). Analysts were expecting a drop of 1.3 million barrels.

Crude output from the refinery fell by 901,000 barrels per day, EIA data showed.

“We are reluctant to read much into today’s price action or the unexpected EIA crude build-up. The complex has had a strong rally and is entitled to a correction,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Investors have been closely watching the impending US sanctions affecting Iran’s oil sector, which are due to take effect in November.

The oil market is bracing for a disruption to global supplies due to sanctions. Brent remains on track for a fifth straight quarterly rise, the longest stretch since early 2007, when a six-quarter stretch saw the price hit a record high of $147.50 a barrel.

Several big buyers, such as a number of Indian refiners, have signaled they will reduce purchases of Iranian crude, but the impact on global markets is not yet clear.

US officials, including President Donald Trump, are trying to reassure consumers and investors that there will be enough supply left in the oil market and have pushed the Organization of the Petroleum Exporting Countries (OPEC) to increase output.

In a speech at the United Nations on Tuesday, Trump reiterated calls for OPEC to pump more oil, accused Iran of sowing chaos and promised new sanctions against the country.

The so-called “OPEC+” group, which includes non-OPEC members such as Russia, met over the weekend but decided not to increase production.

Commerzbank said in a note that “the latest rise in oil prices is primarily due to Trump himself … he has refocused the market’s attention on Iran sanctions, even though the market is currently adequately supplied due to OPEC growth. and Russian production”.

A Nigerian oil industry official said OPEC will act to balance the market after oil prices hit a four-year high, but its options may be limited by available capacity.

(Additional reporting by Amanda Cooper in London and Aaron Sheldrick in Tokyo; Editing by David Gregorio and Sandra Maler)