By Jessica Resnick-Ault
NEW YORK (Reuters) - Oil prices pulled back Thursday after climbing above $80 a barrel for the first time since November 2014, as dollar strength and strong U.S. 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
U.S. 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."
U.S. 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.
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 Rücker, 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.
Oil stocks were expected to drop further as the peak summer driving season nears, offsetting increases in U.S. shale output, Bernstein analysts said.
Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand.
Further supporting prices, Royal Dutch Shell
On the flip-side, however, high oil prices could hit consumption, the International Energy Agency warned on Wednesday as it lowered its global oil demand growth forecast for 2018 to 1.4 million barrels per day (bpd) from 1.5 million bpd. [EIA/S]
The IEA said global oil demand would average 99.2 million bpd in 2018, although U.S. bank Goldman Sachs said consumption would cross 100 million bpd "this summer".
Leading production increases is the United States, where crude output
The result has been a widening difference between U.S. crude and benchmark Brent. WTI traded at $8.20 a barrel below Brent on Thursday, the most since April 2015.
(Additional reporting by Henning Gloystein in Singapore and Ron Bousso in London; editing by David Goodman and Cynthia Osterman)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: May 18, 2018 00:06:16 IST