Futures Movers: Brent oil prices pare gains after surge past $80 for first time since 2014

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Prices for global benchmark Brent crude pared some of their earlier gains on Thursday, pulling back after a surge past $80 a barrel for the first time since 2014.

Options expiration for June West Texas Intermediate crude fed volatility in the market Thursday, and when benchmark U.S. stock indexes moved lower, oil prices followed, said Phil Flynn, senior market analyst at Price Futures Group.

Javier Blas, chief energy correspondent at Bloomberg News, also tweeted that energy ministers from Saudi Arabia and the United Arab Emirates held a phone call Thursday, blaming recent volatility on anxiety over geopolitical events, despite “availability of ample supply.”

WTI prices turned modestly lower, having been poised earlier to mark another three-and-a-half-year settlement high, but Brent prices were still positive for the session, finding ongoing support from Washington’s decision last week to reinstate sanctions on Iran.

July Brent crude LCON8, -0.09%  was up 38 cents, or 0.5%, at $79.66 a barrel on ICE Futures Europe, after tapping a high of $80.50. Prices haven’t see levels this high since November 2014. On the New York Mercantile Exchange, June West Texas Intermediate crude CLM8, -0.32% the U.S. benchmark, inched lower by 12 cents, or nearly 0.2%, at $71.37 a barrel, retreating from a high of $72.30.

“Strong global demand, an ongoing OPEC supply deal, and a rising tide of geopolitical risk” have all combined to push prices higher, said Robbie Fraser, commodity analyst at Schneider Electric. “Among those risks, Iran continues to top the list, with questions remaining around the extent to which a return of U.S. sanctions will limit Iranian oil production.”

“While some non-U.S. companies appear determined to maintain ties with Iranian oil, [French energy giant] Total has moved to halt further investment in Iran based on concerns over U.S. sanctions and Total’s presence in the U.S. market,” he said in a daily note.

European companies had said they would stand by the 2015 international nuclear agreement that saw sanctions against Iran eased in return for Tehran curbing its nuclear program.

French energy major Total SA TOT, +1.10% FP, +1.79%  said Wednesday that it would withdraw from a major gas project in Iran before November if it wasn’t granted a waiver by the U.S. Total had signed a $1 billion deal to develop Iran’s South Pars field.

The U.S. has said it is possible there will be secondary sanctions imposed on European companies who continue to deal with Iran.

“Though Iran is unlikely to give back all the production gains charted since the [Joint Comprehensive Plan of Action] nuclear deal removed sanctions in 2016, they are likely to see steady declines ahead, joining Venezuela in the ranks of OPEC members suffering from involuntary production losses,” said Fraser.

Read: Here’s why U.S. oil is trading at its biggest discount to the global crude benchmark since 2015

Brent prices have climbed almost 20% in 2018, boosted by output cuts from major producers and increased tensions in the Middle East.

“I think there’s more upside at the moment than downside, the new range is $72-$85,” said Michael Hewson, chief market analyst at CMC Markets, adding that he “wouldn’t rule out” $90 brent this year.

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Global oil stocks in the Organization for Economic Cooperation and Development countries hit their lowest level in three years in March, the International Energy Agency said Wednesday.

Investors were also monitoring the economic crisis in Venezuela which has seen a steep fall in the country’s oil production, adding to supply concerns. Presidential elections will be held there on Sunday.

Back on Nymex, June gasoline RBM8, -0.37%  rose 0.3% to $2.256 a gallon, while June heating oil HOM8, +0.40%  rose 0.7% to $2.286 a gallon.

Read: U.S. gasoline prices could top $3 this summer thanks to Iran and Venezuela

Natural-gas prices, meanwhile, moved higher. An EIA report Thursday revealed a weekly rise in U.S. supplies of the commodity that was generally in line with market expectations.

June natural gas NGM18, +1.28%  tacked on 1.2% to $2.85 per British thermal units. It was trading at $2.797 before the supply data.

Domestic supplies of natural gas rose by 106 billion cubic feet for the week ended May 11, the EIA said. Analysts surveyed by S&P Global Platts had forecast a climb of 104 billion cubic feet and on average over the last five years for the same week, inventories rose by 67 billion cubic feet.

— Barbara Kollmeyer contributed to this article.