Oil to Hit $90 a Barrel: Morgan Stanley

Global demand for oil is likely to moderate this year, as the price of crude nears $80 a barrel and many key importing nations no longer offer consumers generous fuel subsidies, the International Energy Agency said on Wednesday.

According to Reuters, Brent crude futures were last down 65 cents at $77.78 a barrel by 11:47 GMT, while USA crude futures fell 32 cents to $70.99 a barrel, leaving the spread between the two just shy of a 2015 high of $7 a barrel. It stood at $79.39 as of 8:20 pm Nigerian time.

Global efforts to reduce air pollution has lifted the hopes of oil traders, as new shipping regulations are expected to boost demand for lower sulfur fuels, raising demand for crude, as the bank's analysts report.

The 50 percent rise in oil prices in the past year is encouraging major companies such as ExxonMobil (XOM.N), Royal Dutch Shell (RDSa.L), Chevron (CVX.N), BP (BP.L) and Total (TOTF.PA) to increase output.

Members of the Organization of Petroleum Exporting Countries, including Saudi Arabia, Kuwait and the United Arab Emirates, said they have enough capacity to fill in any supply gap if renewed sanctions curtail Iran's exports. US West Texas Intermediate (WTI) crude futures were up 29 cents at $71.78 a barrel.

PREMIUM Global oil prices rose to their highest levels in three-and-a-half years in the aftermath of United States President Donald Trump's announcement that the USA will pull out of the Iran nuclear deal.

French energy giant, Total, said on Wednesday that it might abandon a multi-billion dollar gas project in the country if it could not secure a waiver from United States sanctions, adding to doubts on European-led efforts to salvage the global nuclear agreement.

Global inventories of crude oil and refined products dropped sharply in recent months owing to robust demand and OPEC-led production cuts.

On currency markets, the dollar has benefited from bets on higher USA rates, keeping it around multi-month highs against its major peers.

In addition, the IEA has cut its oil consumption forecasts as higher prices work to reduce future demand.

On Wednesday, the U.S. Energy Information Administration reported that U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels. For those who haven't been following the oil market, the price of crude has been steadily rising since the summer due to several geopolitical issues.

"Oil has risen 51 percent in the past year, driven by coordinated supply cuts and, this month, by concern over Iranian supply after the United States said it would reimpose sanctions on Tehran over its nuclear activities".

US crude is hovering near the $72.00 level.

Since the European Union is unlikely to follow the U.S.in re-imposing sanctions on Iran, the overall impact on the Persian Gulf state's exports will be "far more muted" than in the past, tanker tracker Petro-Logistics said in a note.

Goldman Sachs, though, said even with a slowdown in demand and soaring USA output, global oil markets would remain tight.

Iran is OPEC's third-largest crude producer and its output now stands at about 3.8m barrels per day, making up around 4% of global oil supply.


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