Before today's peak oil prices had already been rising thanks to steady demand growth and a landmark deal by oil producing countries, both inside and outside the OPEC cartel, to lower output. Speculators could liquidate en masse and demand growth may underperform, while the amount of Iranian oil taken offline could end up at the lower end of expectations.
More figures on US oil output will be released separately by the EIA and International Energy Agency on Wednesday.
Early Wednesday morning, West Texas Intermediate crude for June delivery traded at $71.26 a barrel, down just five cents compared with Tuesday's closing price of $71.31.
Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand.
Oil market supply deficit to average approximately 800,000 b/d in 2018.
Ample supplies in the market and potential production increases by U.S. and European oil giants helped ease recent price hikes.
Besides lowering its demand outlook, stronger prices also prompted the IEA to increase estimates for supply from Opec's rivals, particularly the US.
Oil hits high
The current oil price is also higher than the World Bank's projected average of $65barrel this year, up from last year's average of $53/barrel. Markets face other disruptions besides Iran, with Venezuela's output plunging to the lowest since the 1950s as its economy unravels. Reuters is reporting that USA crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon. The country is the Iran's second-biggest buyer of crude after China.
Non-OPEC supply this year now is forecast to grow by 1.7 million b/d y/y, with 89% from the United States.
Goldman also said the tight market left room for OPEC to exit (its production cuts) without significant price impact..
Analysts polled by S&P Global Platts expect the EIA Wednesday to report across-the-board weekly declines in petroleum supplies, with crude down 2.3 million barrels, gasoline seen down by 2 million barrels and distillates, which include heating, expected to fall by 1.3 million barrels.
Distillate fuel product supplied averaged about 4.2 million barrels per day over the last four weeks, up by 3.0 percent from the same period past year.
The agency trimmed its 2018 world demand growth projection by 40,000 barrels a day to 1.4 million a day, projecting total consumption at 99.2 million barrels a day.
This morning's EIA inventories report came in at -1.404 million barrels, above projections of -0.763 million.
The U.S.' answer to high prices is to drill, baby, drill.