US stocks end mixed; oil falls

US stocks end mixed; oil falls

This price increase is related to fears that the global supply of oil will be squeezed if the Iran nuclear deal falls through. USA heating oil futures surged to $2.2258 a gallon, the highest since February 2015.

The United States said on Tuesday that it plans to impose new sanctions against Iran after abandoning an agreement reached in late 2015 that curbed Tehran's nuclear activities in exchange for removal of US and European sanctions.

Trying to ease market concerns, Saudi Arabia on Wednesday said it would work with other producers to lessen the impact of any shortage in oil supplies.

"It's the same witches brew of bullish stuff: Iran, Venezuela, the lack of alacrity by Saudi Arabia to bring more oil onto the market", said John Kilduff, partner at Again Capital in NY. "It's definitely not an environment to go home short over the weekend". OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

US crude is trading at a hefty discount to Brent, the worldwide marker, thanks to sharp rises in USA production to 10.7 million bpd, which has left the American domestic oil market well supplied.

For the week, Brent was on track for a 3.5-percent gain and USA crude a 2.3-percent rise.

Crude prices slipped on Thursday, giving up early gains as investors took profits on a rally triggered by potential disruption to oil flows from Iran.

The imposition of sanctions against Iran could lead to a reduction in world oil reserves.

Other nations that do business with Iran also could face US sanctions. Meanwhile, Goldman Sachs has said prices may reach $82.50 a barrel by the summer. Iran emerged as a major producer in 2016 after USA sanctions were lifted as part of the nuclear deal, reaching a daily output of 3.81 million barrels in March 2018 and an average of 2 million barrels per day in the first quarter of the year.

Brent crude oil settled at $78.43 a barrel, up 20 cents, or 0.3 percent, after reaching an intraday peak of $79.47 a barrel, up $1.24 and its highest since November 2014. The deal between Iran, Russia and other members of the Moscow-dominated Eurasian Economic Union is set to be signed next week.

Jefferies said that OPEC has the capacity "to replace the Iranian losses" but added: "Even if physical supply is held constant. the market will still be faced with a precariously low level of spare capacity".

Now Iran, the world's fifth-largest oil producer, will have to decide whether to follow the US and withdraw or try to salvage what's left with the European countries.

USA gasoline futures hit a high of $2.1701 a gallon, the highest since Hurricane Harvey sent prices surging in August.

That is up 27 percent since mid-2016 and means that USA output is creeping ever closer to that of top producer Russian Federation, which pumps about 11 million bpd.

The French finance minister said he pushed U.S. Treasury Secretary Mnuchin this week for three things: exemptions for French companies operating in Iran; or the application of a so-called grandfather clause for deals struck in Iran since 2015; or an extension of the 90-day period to wind down operations in Iran.

More than half the total oil rigs are in Permian basin in west Texas and eastern New Mexico, the nation's biggest shale oil field.

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