Oil prices rallying again on short-term drains on supply

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On October 10, 2017, the Brent-WTI spread was $5.69.

Crude oil prices fell in Asia on Thursday with investors noting the latest supply and picture from the Paris-based International Energy Agency was not as convincing as hoped.

With supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) tightening the market, analysts have been raising their oil price forecasts.

Global benchmark Brent crude futures, the benchmark for oil prices outside the US, eased 0.47% to $56.67 a barrel.

Jeff Brown, president of consultancy Facts Global Energy (FGE), said at the Reuters Global Commodities Summit last week that one potential upside for oil prices would be the USA imposing fresh sanctions on Iran.

USA crude inventories fell 5.7 million barrels last week, the Energy Information Administration said, exceeding analysts' expectations. United States light, sweet crude was 25 cents higher at $52.12.

With Iraqi forces taking back the control of the oil-rich city of Kirkuk from Kurdish control there is fear that a new showdown in the region is imminent.

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Oil prices crept higher on Tuesday, holding on to gains made as fighting between Iraqi and Kurdish forces threatened supplies from northern Iraq while political tension rose between the United States and Iran.

Conflict would hit oil exports from Iraqi Kurdistan, now estimated at around 650,000 barrels per day. U.S. President Donald Trump declined to certify Iran's submission over a nuclear deal, leaving Congress a couple of months to decide further action against Tehran.

On the issue of balance, Total CEO Patrick Pouyanne said Wednesday at an oil and financial conference in London that the OPEC balancing effort was working well, as evidenced by the steady draw on global crude oil inventories. "Collectively, OPEC countries lost more than $1 trillion".

Brent oil prices retreated from three-week highs on Wednesday, after a surprising drop in US refining rates and an unexpected gasoline and diesel stock build signaled lower demand in the world's top oil consumer.

The euro slipped 0.2 percent to $1.1799 and was poised for its third straight day of losses on lingering concerns about the eurozone after a conservative Austrian leader secured a victory in parliamentary elections at the weekend.

USA inventories fell by 7.13 MMbbl last week, the American Petroleum Institute was said to report.

"We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel respectively", it said.