SINGAPORE: Oil prices on Wednesday eased away from 2014 highs reached the previous session as escalating Middle East tensions were offset by increasing inventories and production in the US.
Brent crude futures rose to $70.78 per barrel at 0154 GMT, down 26 cents, or 0.4 percent, from their last close. Brent surged more than 3 percent on Tuesday to hit its highest level since late 2014, at $71.34 a barrel.
US WTI crude futures were at $65.38 a barrel, down 13 cents, or 0.2 percent from their last settlement.
Markets have been tensing on escalating tensions in the Middle East.
The US and its allies are considering air strikes against Syrian President Bashar Assad’s forces following a suspected poison gas attack last weekend.
Pan-European air traffic control agency Eurocontrol said late on Tuesday that air-to-ground and/or cruise missiles could be used within the next 72 hours, warning of intermittent disruption of radio navigation equipment.
Though Syria is not a significant oil producer itself, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge.
There are also concerns that the US could renew sanctions against Iran, a major Middle East oil producer.
“Oil prices are towering on the heightened tension in the Middle East,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
Not all oil market indicators pointed to ongoing price rises, however.
US crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million, according to a report by the American Petroleum Institute (API) on Tuesday, compared with analysts’ expectations for a decrease of 189,000 barrels.
OANDA’s Innes said the API report had “temporarily taken a bit of wind out of the market.”
Adding to rising storage levels, the US Energy Information Administration said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing US shale output.
In its monthly short-term energy outlook, the agency forecast that US crude oil output will rise by 750,000 barrels per day (bpd) to 11.44 million bpd next year. Last month, it expected a 570,000-bpd year-over-year increase to 11.27 million bpd.
That will likely make the US the world’s biggest oil producer by 2019, surpassing Russia which currently pumps out almost 11 million bpd.
Oil dips on conflict in Syria, rise in US inventories
Oil dips on conflict in Syria, rise in US inventories
QatarEnergy announces force majeure following Iran attacks: statement
DOHA: Qatar’s state-run energy firm on Wednesday declared force majeure following attacks on two of its main facilities that halted liquefied natural gas production and as Iran pressed missile and drone attacks across the Gulf.
“Further to the announcement by QatarEnergy to stop production of liquefied natural gas and associated products, QatarEnergy has declared Force Majeure to its affected buyers,” the company said in a statement.
QatarEnergy invoked the clause, which shields it from penalties and potential breach of contract claims from clients, after stopping LNG production on Monday.
Iranian drones attacked two of the company’s main production hubs in Ras Laffan Industrial City, 80 km north of Doha and in Mesaieed 40 km south of the Qatari capital, Doha’s ministry of defense said at the time.
The Gulf state is one of the world’s top liquefied natural gas producers, alongside the US, Australia and Russia.
On Tuesday, QatarEnergy said it would halt some downstream production of some products including urea, polymers, methanol, aluminum and others.
Qatar shares the world’s largest natural gas reservoir with Iran.
QatarEnergy estimates the Gulf state’s portion of the reservoir, the North Field, holds about 10 percent of the world’s known natural gas reserves.
In recent years, Qatar has inked a series of long-term LNG deals with France’s Total, Britain’s Shell, India’s Petronet, China’s Sinopec and Italy’s Eni, among others.
