Stars align for accelerating crude oil prices

May 17 (UPI) -- A bullish report on U.S. crude oil inventories and lingering sentiments on geopolitical risks left Brent crude oil prices hovering near $80 per barrel Thursday.

Brent crude oil, the global benchmark, was bouncing around the $80 per barrel mark for most of the overnight session. If it closes above the psychological mark, it would be the first time crude oil prices were that high since late 2014.

Oil markets are reacting to U.S. President Donald Trump's decision to withdraw from a U.N.-backed agreement that gives Iran global energy access in exchange for a nuclear scaleback. That could eventually pull 1 million barrels per day from the market and have a wider ripple effect across the energy market. French supermajor Total said Wednesday it was reviewing its Iranian commitments in light of U.S. pressure.

Venezuela, meanwhile, continues to decline as a major producer. And this week, the U.S. government reported a sizeable drain on commercial crude oil inventories. That adds up to positive factors for the oil market.

Brent was up 0.55 percent as of 9:16 a.m. EDT to $79.72 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.56 percent to $71.89 per barrel.

The rally was supported in part by a declaration of force majeure on Nigerian crude oil exports. Commodity pricing group S&P Global Platts stated in a market report emailed to UPI that a spokesman for Shell's subsidiary in Nigeria confirmed the stoppage because of leak on a pipeline.

Force majeure is a contractual condition related to circumstances beyond the control of the parties involved.

The question now is whether the global economy can handle $80 per barrel oil. For consumers in the United States, that could crimp discretionary spending as more of their income goes in the gasoline tank, taking away some of the benefit from U.S. President Donald Trump's tax overhaul.

Matthew Smith, the director of commodity research at ClipperData, told UPI there's good reason to feel cautious about $80 per barrel given the potential economic impact.

"With everyone so bullish at the moment, it feels like a good time for a pause in the rally from a contrarian perspective, especially given the psychological levels involved," he said.

For industries, however, the Federal Reserve Bank of Philadelphia reported in its May business outlook for the manufacturing sector that things are looking up. New orders, new shipments and employment all improved from April levels.

"The survey's future indexes, measuring expectations for the next six months, reflected continued optimism," the report read.