Oil slips as economic concerns counter tightening supplies

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Output from OPEC member Iran in August hit its lowest level since July 2016, the IEA said, "as more buyers distanced themselves from Tehran ahead of looming USA sanctions", the report said.

The storm is expected to make landfall on the U.S. East Coast on Friday.

The group said OPEC has another 2.7 million barrels a day of spare production that it could tap, 60 per cent of it in Saudi Arabia.

Brent rose above $80 per barrel on Wednesday for the first time since May, spurred by expectations that USA sanctions against Iran's oil exports, which will start in November, will tighten global markets.

On Tuesday the U.S. Energy Information Administration cut its 2018 world oil demand growth forecast by 80,000 barrels per day to 1.58 million bpd.

South Korea has chose to comply with US demands to cut oil imports from Iran to zero, becoming the first to do so out of the top three buyers.

"They (South Koreans and Japanese refiners) need to find replacements for their drop in Iran imports and a fair amount of that is coming from the States". The global record came as output from the Organization of the Petroleum Exporting Countries rose to a nine-month high of over 32 million barrels per day (mb/d). Notably, the increased revenues were reported despite the United States' announcement in May that it would sanction those purchasing Iranian oil starting in early November, with the ultimate goal of reducing Iranian oil sales to zero in order to place pressure on the Iranian government. "The news backdrop does not really point to any further price slide: according to the DOE, US crude oil stocks declined by a surprisingly sharp 4.3 million barrels to 401.5 million barrels last week - their lowest level since February 2015".

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S&P global Platts said OPEC, in a report, indicated demand for the organization's own crude oil in September will be nearly 1 million bpd more than the level produced in August.

EIA expects West Texas Intermediate crude prices will average roughly $6/Bbl lower than Brent prices in both 2018 and in 2019.

Momentum had been building earlier in the week and was then given a further boost in midweek from a significant reduction in weekly U.S. crude inventories as reported by the Energy Information Administration (EIA).

Opec and its allies will meet in Algiers this month to assess global oil markets after having agreed to increase output at their last meeting in June.

Meanwhile, Venezuela's protracted economic disaster has led to a production collapse that's seen 1 million bpd wiped off the market within the previous two years, and supply there could be anticipated to proceed to deteriorate rapid.

In a factsheet about the new sanctions on Iran's oil, the U.S. Treasury says that the scope of "petroleum products" includes-as defined by the U.S. EIA-"unfinished oils, liquefied petroleum gases, pentanes plus, aviation gasoline, motor gasoline, naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate fuel oil, residual fuel oil, petrochemical feedstocks, special naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still gas, and miscellaneous products obtained from the processing of crude oil (including lease condensate), natural gas, and other hydrocarbon compounds".

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