May 18 (UPI) -- Its economic fundamentals rather than geopolitical currents that are driving the global energy market, the American Petroleum Institute said.
The price for Brent crude oil, the global benchmark, is up 4.5 percent, or $4.75 per barrel, since U.S. President Donald Trump left an Iranian nuclear deal with global partners that puts Iranian oil barrels on the market. The price for Brent was trending positive early Friday and if it settles above $80 per barrel, it would be the highest price since November 2014.
On Wednesday, the International Energy Agency said geopolitical issues were drawing the focus away from more fundamental issues like supply and demand metrics. In its report, an economist at the API, an industry trade group, said that while the Iranian issue has dominated news headlines, fundamentals were still in play as U.S. production and demand improve.
"The strong supply figure was also backed by strong petroleum demand of over 20.3 million barrels per day last month, motor gasoline demand for first four months of 2018 was the second highest on record," economist Dean Foreman said in a statement. "Economic fundamentals continue to propel petroleum markets at home and abroad."
API reported that consumer gasoline demand, measured by deliveries, was 9.3 million bpd in April, up 1.3 percent from March. By May, however, the retail price for regular unleaded hit the psychological level of $3 per gallon mark, a point where some analysts believe consumer behaviors will change.
The U.S. Commerce Department on Tuesday said consumer spending increased marginally last month, noting that higher gasoline prices were eating away at discretionary spending. API, meanwhile, reported that commercial crude oil inventories in the domestic market increased by 4.8 million barrels last week, though its data was countered by federal U.S. reports of a draw.
An oversupply situation two years ago pushed the price of oil below $30 per barrel.
On the price of oil, API said West Texas Intermediate, the U.S. benchmark, was suppressed by infrastructure constraints in the domestic market. There's not enough pipeline capacity to keep up with shale oil production and port infrastructure wasn't designed to cater to a U.S. oil export market.