Oil pulled back from a six-month high as an industry report signaling a gain in U.S. crude inventories partly offset concerns over America’s campaign to halt Iranian exports.
Futures in New York fell as much as 0.8 percent. Crude stockpiles rose by 6.86 million barrels last week, the American Petroleum Institute was said to report on Tuesday. Saudi Arabian Energy Minister Khalid Al-Falih said he sees no need for immediate action in response to tighter U.S. sanctions on Iran, while the International Energy Agency said there remain “comfortable” levels of spare capacity.
Oil has rallied further after posting its best quarter since 2009 as the Saudis led output cuts by a coalition of producers including Russia to avoid a global glut. Disruptions in members of the Organization of Petroleum Exporting Countries such as Venezuela, Libya and Nigeria have also buoyed prices, with the White House adding to the supply crunch by refusing to extend sanctions waivers beyond May 2 for importing oil from Iran. However, the market remains well supplied.
“The situation in the oil market has calmed down,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Apparently, the global oil market is sufficiently supplied.”
West Texas Intermediate for June delivery declined 19 cents, or 0.3 percent, to $66.11 a barrel on the New York Mercantile Exchange at 10:56 a.m. in London after dropping as much as 53 cents earlier. Prices gained $2.30 over the previous two sessions to $66.30 on Tuesday, the highest close since Oct. 31.
Brent for June settlement fell 3 cents to $74.48 a barrel on the London-based ICE Futures Europe exchange. It increased 3.5 percent in the first two days of the week. The global benchmark crude was at a premium of $8.36 to WTI.
While the API reported a gain in nationwide inventories, its data showed a 389,000 barrel drop in the hoard at Cushing, Oklahoma. That would be a third consecutive draw at the U.S. storage hub if confirmed by government figures due Wednesday. The median forecast of analysts in a Bloomberg survey signals American crude stockpiles may have risen by 1 million barrels last week.
While Saudi Arabia’s Al-Falih said there was no need for an instant response to the tougher sanctions on Iran, he told reporters in Riyadh that the kingdom will cater to the requirements of its customers, particularly those affected by the new U.S. policy.
“The estimated gain in American inventories is pacing down the rally we’ve seen earlier,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “Oil’s expected to stay steady until we see more details on how the Saudis and its allies will bump up their output, going a step further from just signaling a boost.”
The International Energy Agency said it’s ready to act if necessary to ensure the market is well-supplied, according to a statement. The Paris-based IEA said global oil markets are currently at “comfortable” levels of spare capacity, and that it will continue to monitor closely and remain engaged with major producers and consumers.
Other oil-market news: Crude market gauges suggest oil traders are betting on further price increases after the Trump administration’s decision to halt waivers from U.S. sanctions on Iran. Iran’s president Hassan Rouhani said it will be “impossible” to slash his nation’s oil exports to zero. U.S. oil is seen flowing freely to China again after slowing to trickle as more ships wait to make the long voyage from America with the easing of trade tensions. Crude futures in Shanghai were down 0.3 percent in afternoon trade, after a five-day winning streak.