Oil price weakens but still near 3-year high

Oil price weakens but still near 3-year high

"Oil prices have more than doubled since bottoming in early 2016, as the large overhang of inventories has been reduced significantly", said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook.

A potential withdrawal in May by US President Donald Trump from a 2015 nuclear deal between world powers and Iran would reimpose sanctions on the producer and curb its exports.

Brent crude oil futures were down 40 cents at $73.46 USA a barrel mid-morning Wednesday, slipping further from the November 2014 high of $75.47 reached on Tuesday.

"French President Macron appears to have little hope that he would be able to persuade U.S. President Trump to remain in the nuclear agreement ..."

The deal gives Marathon more exposure to USA shale, thanks to Andeavor's existing logistics and terminal operations in Texas and North Dakota shale regions. The more-active July contract closed rose 90 cents to close at $74.69.

Oil has risen 15% in the last four weeks due to expectations the USA will re-impose sanctions against major oil producer and OPEC member Iran.

In the United States, working oil rigs rose by five last week to 825, the highest level since March 2015, according to data from Baker Hughes. "Reimposing US sanctions is not a foregone conclusion just yet".

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The Trump administration defines "denuclearisation" as Kim giving up his nuclear weapons, something he has been unwilling to do. President Donald Trump "can take the Nobel prize" as long as the Koreas receive peace in return.

Brent was on track for a weekly gain of about 1 percent, while WTI was set for a weekly loss of about 0.3 percent.

But while USA producers are accelerating shale drilling in areas in the United States, higher production has not necessarily translated into stronger refining results for some oil companies.

A rise in United States government borrowing costs to their highest since 2013 this week, has tempered some investor appetite for risk, but analysts said Brent crude futures, the global benchmark, may yet rise toward new 2018 peaks above $75 a barrel.

Buyers were pressing for lower levels in part because of good availability of crude in Europe and the US and a wide gap between Brent and the US WTI benchmarks. "Since the market is already tight because of the high production outages in Venezuela and the production cuts implemented by OPEC and Russian Federation, any further reduction of supply weighs all the more heavily", the bank said.

Surging U.S. production, which rose to 10.59 million barrels per day last week, has encouraged record-high U.S. exports. US crude stockpiles probably increased by 1.25 million barrels, according to the median estimate of analysts surveyed by Bloomberg.

The dollar against a basket of currencies hit its highest since mid-January.

The price action was choppy this week with both WTI and Brent posting two-sided moves.

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