Oil prices dipped on Wednesday, pulled down by a reported rise in U.S. crude inventories, although falling exports from Iran ahead of U.S. sanctions prevented the market from sinking further.
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International Brent crude oil futures were at $75.90 per barrel at 0611 GMT, down 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were down 4 cents at $68.49 a barrel.
In the United States, crude inventories rose slightly, by 38,000 barrels, to 405.7 million barrels in the week to Aug. 24, industry group the American Petroleum Institute said on Tuesday.
“The API reported surprisingly flat numbers to a market expecting a reasonable draw in crude and a build in products,” said Sukrit Vijayakar, Director of oil consultancy Trifecta.
Official U.S. fuel inventory and crude production data will be published on Wednesday by the Energy Information Administration (EIA).
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Despite the rise in U.S. inventories, traders said crude prices have been relatively well supported by the prospect of U.S. sanctions against Iran, which will start to target its oil industry from November.
Bowing to pressure from Washington, many crude buyers have already reduced orders from OPEC’s third-biggest producer.
Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million barrels per day (bpd), versus a peak of 3.09 million bpd in April, trade flows data on Thomson Reuters Eikon showed.
RISING NON-OPEC SUPPLY
Another concern is crisis-struck OPEC-member Venezuela, where oil exports have dropped by half since 2016 to below 1 million bpd.
To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oil fields, valuing the investment at $430 million. However, given the country’s political and economic instability, many analysts doubted whether this investment would go through.
Despite the risk of disruption especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb towards year-end.
“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the U.S. bank said in a note to clients.
“Currently, non-OPEC supply outages are at a 15-month high of 730,000 barrels per day. However, nearly half of these volumes are in the process of being restored,” it said.
Adding to that will be new production in Canada, Brazil and from the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second-half of the year “taming upside pressures on Brent crude oil prices.”
Bank of America said it expected Brent prices to be in a $65 to $80 per barrel range “until Iran sanctions start to bite” in the first-half of 2019.
(Reporting by Henning Gloystein; Editing by Joseph Radford and Tom Hogue)
