Brent crude oil prices fell slightly Wednesday but are still hovering near a four-year high while U.S. crude oil supplies had a surprise increase.
Brent was trading at $80.67, in Wednesday morning trading, down 59 cents from the prior day. U.S. supplies of crude oil jumped 1.9 million barrels for the week ending Sept. 21, the U.S. Energy Information Administration reported. Analysts had expected a 1.3 million barrel swing in the opposite direction.
That unexpected supply surge pushed WTI crude prices down 49 cents to $71.79 in Wednesday trading.
Demand for U.S. petroleum increased to 20.8 million barrels per day in August, up 250,000 barrels per day from July, the American Petroleum Institute reports. That’s the highest demand since August 2007, which reflects solid economic growth, industrial activity and consumer confidence.
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Demand for consumer gasoline was 9.7 million barrels per day in August, down 0.8 percent from August 2017 but the third-highest demand for August since 1945. API suggests higher gasoline prices contributed to slightly lower demand than 2016 and 2017.
Washington preparing for Iran sanctions
Indian refiners and other big buyers of Iranian crude oil are already winding down purchases in anticipation of the U.S. sanction on Iran taking effect. The sanctions eliminate 1.7 million barrels per day from the world’s supply, causing some to panic about where prices could go, Jeff Mower, director of Americas Oil News for S&P Global Platts, told CNBC.
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Iranian President Hassan Rouhani had strong words for Trump regarding the sanctions.
“We consider U.S. sanctions illegal and cruel against the Iranian nation, and the sanctions affect Iranian people’s judgement towards the U.S. government, and it’s not for no reason that the slogans against the United States have become stronger than ever before in mass demonstrations,” Rouhani said. “The goal that Americans are seeking to deprive Iran of selling its oil is not only not feasible, but will be very dangerous.”
Trump administration officials are reassuring the world that there will be adequate supply.
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“We will ensure prior to the re-imposition of our sanctions that we have a well-supplied market,” Brian Hook, Washington’s special envoy to Iran, said at a new conference at the United Nations Tuesday.
The United States also imposed sanctions on OPEC oil producer Venezuela. For now, the sanctions don’t affect the country’s crude oil exports, of which U.S. refineries import 500,000 barrels a day. If that changes, it could have a “bullish impact” on prices, Mower said.