May 10 (UPI) — Crude oil prices tried to continue their upward trajectory Thursday on actual and future supply drawdowns, but trends were offset by tepid U.S. consumer prices.
A decision Tuesday from U.S. President Donald Trump to back out of the Iranian nuclear deal may put the global oil market in a deficit. The concerns were to such a degree that the International Energy Agency said it may act should the situation warrant a coordinated move. In 2011, parties to the IEA, which include the United States, pulled oil out of strategic reserves because of Libyan outages.
Swiss financial services company UBS said it was shifting its posture from “sideways” to bullish and put its target range for crude oil at $85 per barrel at the high end.
“With supply risks already high in Venezuela, where oil production has been in free fall, the oil market is likely to remain in deficit this year,” the emailed market report read.
After rallying more than 3 percent in the previous session, the price for oil was cooling off early Thursday. The price for Brent crude oil was down 0.1 percent to $77.13 per barrel as of 9:15 a.m. EDT. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.11 percent to $71.22 per barrel.
This week’s rally in crude oil prices may be a knee-jerk reaction to the U.S. move out of the Iranian deal. The language of the sanctions legislation outlines a 180-day window, meaning it’s too soon for Iranian oil flows to be limited in real terms. Analysis from commodity pricing group S&P Global Platts found there may be some “wiggle room” given the nature of the U.S. decision.
In the United States, the world’s leading economy, the cost of consumer goods rose less than expected, even though items like gasoline continue to gain in price. The cost of all items, save for food and energy, rose 0.1 percent last month, compared with 0.3 percent in January.
New and used vehicles led the decline in the United States, the world’s leading economy. But fuel prices, spurred on by a steady streak of higher oil prices, continued to accelerate. Gasoline prices for the 12 months ending in April, meanwhile, are up 13.4 percent.
Gasoline prices may be approaching $3 per gallon on average, a psychological point that could trigger a change in consumer habits. Elsewhere, the U.S. Labor Department reported hourly earnings for all employees were static from March to April.