Brent crude oil pulled back from a 3½-year high Wednesday, while U.S. oil saw muted action, as investors reassessed appetite for crude after a multisession run-up.
Brent crude, the global oil benchmark LCON8, -0.64% shed 28 cents, or 0.4%, to $78.15 after touching November 2014 .
On the New York Mercantile Exchange, West Texas Intermediate futures traded at break-even levels at $71.33 a barrel, hovering around its loftiest level since Nov. 26, 2014.
Energy traders have been cuing in on the spread between U.S. benchmark WTI and Brent, which stands at about $7, as a signal of demand for crude from Europe and Asian, market participants said.
Read: Here’s why U.S. oil is trading at its biggest discount to the global crude benchmark since 2015
Early Wednesday, a monthly report from the International Energy Agency said global oil demand growth for 2018 has been cut to 1.4 million barrels a day, compared with 1.5 million barrels a day previously. The report indicated that while growth for the first quarter of 2018 remained strong and that trend appeared to hold so far in the second quarter, “a slowdown in 2H18 largely attributable to higher oil prices,” was expected. “World oil demand is expected to average 99.2 mb/d in 2018,” the report indicated.
Crude trade continues to be influenced by Iran’s withdrawal last week from the key 2015 multilateral nuclear pact, which had seen the easing of sanctions against Tehran in return for curbs to its nuclear program. Now, the market has been propelled higher on a slate of expected sanctions against the Middle Eastern oil producer and member of the Organization of the Petroleum Exporting Countries, with oil exports likely a key target of penalties—a factor that is anticipated to lift crude prices internationally.
Iran is OPEC’s third largest oil producer and in the past sanctions have curbed its exports by around 1 million barrels a day.
Crude’s recent gains to multiyear highs also have been buttressed by OPEC and non-OPEC pledges to curb global crude production.
Brent oil prices have risen by around 17% this year, boosted by production cuts by major producers tightening supplies, and increased geopolitical tensions.
However, U.S. shale oil production is forecast to climb. A monthly report from the U.S. Energy Information Administration on Monday said crude-oil production from seven major U.S. shale plays is expected to see a climb of 144,000 barrels a day in June to 7.178 million barrels a day.
More figures on U.S. oil output will be released separately by the EIA late-morning Wednesday.
Analysts polled by S&P Global Platts expect the EIA Wednesday to report across-the-board weekly declines in petroleum supplies, with crude down 2.3 million barrels, gasoline seen down by 2 million barrels and distillates, which include heating, expected to fall by 1.3 million barrels.
Elsewhere on Nymex, June gasoline RBM8, -0.07% rose 0.2% to $2.206 a gallon, while June heating HOM8, -0.44% slipped by 0.3%, to $2.242 a gallon.
June natural gas NGM18, -0.56% lost 0.6%, at $2.818 per British thermal units.
—Myra Picache contributed to this report
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