Oil has steepest drop in a month as economic concerns threaten demand

Outside the United States, traders have been focusing on the impact of USA sanctions against Iran that will target oil exports from November.

However, it was crude that was at the centre of market attention, with worldwide benchmark Brent rallying to $80 per barrel following the EIA report before easing back slightly. Notably, the increased revenues were reported despite the United States' announcement in May that it would sanction those purchasing Iranian oil starting in early November, with the ultimate goal of reducing Iranian oil sales to zero in order to place pressure on the Iranian government.

The International Energy Agency said Thursday that the global oil supply reached 100 million barrels a day for the first time ever, boosted by rising production in the USA and several OPEC nations.

"Rising challenges in some emerging and developing economies are skewing the current global economic growth risk forecast to the downside", OPEC said in the report.

Innes said the slight dips on Thursday came as rising refined product inventories, which the EIA also reported, "slightly dampened market overexuberance" as it indicated that USA fuel demand may be weakening.

Oil production by OPEC's defacto leader, Saudi Arabia, has ticked up since May, when it and Russian Federation signaled they could increase output to fill any supply shortages due to upcoming USA sanctions on Iran.

Inventories at the Cushing, Oklahoma, delivery hub for USA crude futures, located in the PADD 2 or the Midwest, fell 1.2 million barrels, EIA said.

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Benchmark Brent crude futures were up $1.01 at $80.07 a barrel by 10:58 a.m. EDT (1458 GMT) after reaching $80.13 a barrel, its highest since May 22.

Russian energy minister Alexander Novak on Wednesday warned of the impact of US sanctions against Iran.

The previous sanctions cut 1.22 million bpd of Iranian crude oil exports which averaged 1.1 million bpd between 2012 and 2015, the Oxford Institute for Energy Studies data shows.

"A bout of profit-taking is pushing the energy complex down after two days of stellar gains", said Stephen Brennock, an analyst at PVM Oil.

According to the IEA, a rebound in Libyan production, near-record Iraqi output and higher supply from Nigeria and OPEC kingpin Saudi Arabia have so far managed to offset the impact of shrinking production from crisis-hit Venezuela and Iran.

"We see global oil demand growing by 1.4 million barrels per day in both 2018 and 2019", BNP Paribas said, implying that global markets are likely to remain sufficiently supplied. Iran, Opec's third-largest member, is feeling the effect of the sanctions.

The storm is expected to make landfall on the U.S. East Coast on Friday.