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Oil Prices Rise On Ongoing Venezuelan Supply Trouble

Oil Prices Rise On Ongoing Venezuelan Supply Trouble

Oil traded near US$65 a barrel as an industry report showing a drop in American crude stockpiles countered fears about a potential Opec supply boost.

In similar fashion, the metal for delivery in July contracts was trading higher by Rs 32, or 0.73 per cent to Rs 4,387 per barrel in 272 lots.

According to a report published Tuesday by Bloomberg News, the US government has issued a direct appeal to Saudi Arabia and other members of the Organization of Petroleum Exporting Countries to put more oil on the market.

U.S. West Texas Intermediate pooh-poohed the report, ending Tuesday's session up 77 cents, or 1.2%, at $65.52 a barrel, rallying from a almost two-month low of $64.22/Bbl earlier in the session, Kallanish Energy reports.

Crude oil prices are continuing to diverge as global benchmarks rise relative to land locked WTI.

OPEC will meet in Vienna on June 22 to decide whether the group and non-OPEC producers, including Russian Federation, should raise output to make up for any supply shortfall from Iran and Venezuela. "North America imported 3.21 mb/d of crude oil from Member Countries, which was 82,000 b/d, or 2.5 per cent, less compared to 2016 volumes", said the cartel.

"It's a tug of war between the loss of supply from Venezuela and Iran and the potential output increase from OPEC and US shale", said Tony Nunan, risk manager at Mitsubishi Corp. Trump has complained, meanwhile, that OPEC was inflating the price of oil through artificial means.

In what is an increasingly familiar scenario, the Energy Information Agency on Wednesday disclosed that US crude inventories rose 2.1 million barrels in the week to June 1, contrary to earlier estimates from analysts that a decrease of 1.8 million barrels would be reported; the EIA also said that USA crude output hit a record of 10.8 million barrels per day in the week. Now the U.S. is asking Saudi (And Russia) to raise oil production by 1 million bdp, but as this will drive prices lower, will the OEPC upcoming June 22 meeting agree to that?

Oil fell Wednesday after the Energy Information Administration reported an unexpected increase in USA crude inventories.

The European Commission announced yesterday it endorsed a decision to impose duties on imported USA goods in response to US President Donald Trump's move on aluminum and steel tariffs.

"The market should stay in deficit" despite Venezuela President Nicolas Maduro's comments his country stands ready to raise production should Opec decide to do so, he said.

OPEC and its allies led by Russian Federation have cut a combined 1.8 million barrels per day of output since January 2017 and the cuts are due to expire at the end of 2018. After all, Tweeter-in-Chief attached Opec for "artificially" raising oil prices.

"(The output decision) is going to be the main event of the month and the main input for the second half of the year, so any change in OPEC policy is a big event", Petromatrix strategist Olivier Jakob said, Reuters reported.

OPEC, founded in 1960, has a history of collaboration over oil policy despite differences of opinion and even wars between some members over the years.

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