WTI backs off from 32-month highs

• WTI backs away from the recent highs due to EIA data.
• A break north of $70/bbl may prove unsustainable, given the massive scale of spare capacity, according to analysts. 

At the time of writing, West Texas Intermediate (WTI) is trading at $69.69 and losing some 0.5% after falling from a fresh 32-month high that was printed early on Wednesday to a low of $69.48.

Oil was an initial bid when US Secretary of State Anthony Blinken said sanctions imposed on Iran are likely to remain in place even if a new nuclear deal is reached.

The comments were easing concerns that renewed oil exports from the country would upset the supply management from OPEC+ that is supporting higher prices.

However, crude oil fell off a 32-month high on Wednesday on a big rise in US gasoline inventories.

US: EIA Crude Oil Stocks decrease by 5.2 million barrels, WTI holds above $70

In its weekly survey, the Energy Information Administration said US oil inventories fell by 5.2-million barrels last week, well ahead of expectations for a 2.9-million barrel drop.

However, the fact that Iran sanctions will remain in place even if the United States rejoins the joint nuclear accord to limit Iran's nuclear ambitions, according to a Reuters report, should help to keep the price near to daily highs in the vicinity of the $70 level. 

Additionally, the American Petroleum Institute on Tuesday reported U.S. oil inventories fell by 2.1 million barrels last week. 

''Energy supply risk is finally providing some support for the complex,'' analysts at TD Securities said. 

''A return decomposition for energy markets highlights that energy supply is increasingly the primary contributor to returns, as the unresolved Iran nuclear deal and a cautious OPEC+ create the set-up for a Summer Breakout.''

''A global vaccination rollout is set to drive mobility sharply higher this summer, but OPEC's cautious plan to raise output should tighten the market with considerable deficits expected in the coming months, with oil supplies set to reach the critical benchmarks set by the 2015-19 average levels by July.''

However, the analysts also said that ''a summer breakout also opens the door for OPEC to ramp up the pace of their unwind from extraordinary supply management. This suggests that a break north of $70/bbl may prove unsustainable, given the massive scale of spare capacity, but the set-up for a summer breakout continues to firm.''