Picture: REUTERS
Picture: REUTERS

London — Oil slipped below $80 a barrel on Thursday as the fourth weekly increase in US crude inventories suggested ample supply, while Saudi-US tension and falling Iranian exports lent support.

US crude inventories rose 6.5-million barrels last week, the Energy Information Administration (EIA) said on Wednesday, the fourth straight weekly increase and almost three times what analysts had forecast.

Brent crude, the global benchmark, was down 50c at $79.55 a barrel at 8.40am GMT. It has dropped more thasn $7 from a 2014 high of $86.74 reached on October 3. US crude was down 28c at $69.47.

“Stocks are building,” said Olivier Jakob, oil analyst at PetroMatrix. “It’s a continuous trend. Week after week, it does start to add up.”

Oil has been rising this week on concern about a decline in Iranian exports due to US sanctions and tension between the US  and Saudi Arabia after the death of Saudi journalist Jamal Khashoggi. US lawmakers pointed the finger at the Saudi leadership over the disappearance of the Saudi critic, suggesting sanctions could be possible. Saudi Arabia denies that it had any role in Khashoggi’s disappearance.

But on Wednesday, US President Donald Trump gave Saudi Arabia the benefit of the doubt in the journalist’s disappearance, suggesting the White House may not take additional action against Saudi Arabia.

Signs that Iranian oil exports have been falling more steeply than some in the market expected amid looming US sanctions have also underpinned the market. US sanctions on Iranian oil take effect on November 4 and buyers are already stopping or scaling back their Iranian crude dealings, according to tanker data and industry sources.

Exports have declined already to about 1.5-million barrels per day (bpd), up to 1-million bpd below levels seen earlier this year. Some analysts say the drop in supplies may be starting to wane as a source of price support.

Analysts at JBC Energy said in a report, “Assuming that Iranian crude exports will stabilise around 900,000 bpd, one can make a strong case that the peak bullish impact of Iran is, in fact, already behind us.”