Oil prices pulled back Thursday after climbing above $80 a barrel for the first time since November 2014, as dollar strength and strong US crude production pumped the brakes on a rally driven by geopolitical concerns. A "crisis fatigue" is setting in, and absent fresh headlines on Mideast tensions, the market is pulling back as rhetoric between Iran and Israel has calmed.
Brent crude futures reached an intraday high of $80.33 a barrel before turning netgative to trade down 4 cents at $79.24 a barrel by 1:57 p.m. EDT (1857 GMT). US West Texas Intermediate (WTI) crude futures were down 15 cents at $71.34 after also hitting their highest since November 2014, at $72.30 a barrel. "Production is holding back West Texas Intermediate," said John Kilduff, partner at Again Capital in New York.
Geopolitical tensions provided a floor for the price, traders said. "We are going to have reduced supplies from Iran in six months and Venezuela hasn't shown that they can stop the drop in their supplies," said Gene McGillian, vice president of research at Tradition Energy."
Meanwhile, Saudi Arabia said it would make sure the world is adequately supplied with oil to support global economic growth just as top consumer India expressed frustration with oil prices hitting $80 per barrel for the first time since 2014.
OPEC's most influential energy minister, Saudi Arabia's Khalid al Falih, called India's Petroleum Minister Dharmendra Pradhan to assure him that supporting global economic growth was "one of the kingdom's key goals", the Saudi ministry said in a statement.
"He (Falih) reiterated his commitment towards market stability and that the Kingdom together with other producers will ensure availability of adequate supplies to offset any potential shortfalls," the statement said. Both the Saudi and Indian ministries said Pradhan expressed concern about escalating prices and the impact it has on consumers and especially on the Indian economy, the world's third largest oil consumer.
"I expressed my concern about rising prices of crude oil and its negative impact on consumers and the Indian economy and reiterated the need for stable and moderate crude oil prices," Pradhan said in a statement. The statements said Falih briefed Pradhan on his consultations with major producing countries both in and outside of OPEC, including Russia.
US President Donald Trump's decision this month to withdraw from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC's third-largest producer has boosted oil prices. France's Total warned on Wednesday that it might abandon a multibillion-dollar gas project in Iran if it could not secure a waiver from US sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.
VENEZUELA DROP A rapid decline in Venezuela's crude production has further roiled markets in recent months. "The geopolitical noise and escalation fears are here to stay," said Norbert R?cker, head of macro and commodity research at Swiss bank Julius Baer. "Supply concerns are top of mind after the United States left the Iran nuclear deal." Global inventories of crude oil and refined products dropped sharply in recent months owing to robust demand and OPEC-led production cuts.