EIA cuts U.S. output growth forecast

Oil prices climb as Iran sanctions loom

U.S. Midwest crude oil inventories fell to 105.9 million barrels last week, the lowest weekly level since January 2015, EIA data showed.

The November delivery of Brent crude opened at $79.44 per barrel at the start of Wednesday's trading on the futures market, a 0.44 per cent increase since the previous session's close.

US light crude fell $1.15 to a low of $69.22 a barrel and was last at $69.50, down 87 cents.

US crude supplies dropped by 8.6 million barrels in the week to September 7 to 395.9 million, the American Petroleum Institute (API) reported on Tuesday.

Since spring when the Trump Administration said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply.

"We see global oil demand growing by 1.4 million barrels per day in both 2018 and 2019", BNP Paribas said, implying that global markets are likely to remain sufficiently supplied. Brent touched $80 for the first time since May during Wednesday's session.

Short-term, the outlook is for tighter supply.

South Korea has chose to comply with US demands to cut oil imports from Iran to zero, becoming the first to do so out of the top three buyers.

Washington on Monday offered 11 million barrels of high-sulphur, or sour, crude from its Strategic Petroleum Reserve (SPR) for delivery from October 1 to November 30.

"Iran is increasingly becoming the preoccupation of the crude market".

Brent rose above $80 per barrel on Wednesday for the first time since May, spurred by expectations that US sanctions against Iran's oil exports, which will start in November, will tighten global markets.

Russian energy minister Alexander Novak on Wednesday warned of the impact the USA sanctions against Iran.

Also on Wednesday, OPEC reduced its 2019 forecast for global oil demand citing economic risk as the reason for its downward adjustment.

Imports of Iranian oil by India, Tehran's top oil client after China, fell by about a third to about 523,000 bpd in August from July as state refiners slowed purchases due to a delay in securing government approval to use Iranian ships. "The situation should be closely watched, the right decisions should be taken", he said.

"World demand will average 98.82 million bpd in 2018, a demand growth of 1.62 million bpd", said S&P.

Venezuela, which is pumping at just half the rate it managed in early 2016, could see its output slump another 19 percent to 1 million barrels a day this year as infrastructure deteriorates and workers flee, the agency predicted.

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