Brent oil back to $80 as supply concerns mount

Brent oil back to $80 as supply concerns mount

Brent oil back to $80 as supply concerns mount

"The large rise in crude oil inventories made for a bearish report, and it came as a result of decent sized drop in exports, along with a large increase in imports", said John Kilduff, a partner at Again Capital LLC in NY.

World oil prices decline on May 23, investors win back a report on a possible decision by OPEC to increase oil production.

Week over week, USA crude oil exports fell by 818,000 barrels a day, and US production rose by 2,000 barrels a day to 10.73 million.

The price drop of both WTI and Brent crude oil this week is being attributed to sanctions on Iran and increased sanctions on Venezuela following last weekend's re-election of Nicolas Maduro.

The benchmarks are diverging as rising inventories in the US weigh on American futures while risks to supply from Iran to Venezuela buoy Brent.

"However, now that we are getting closer to $100/bbl the net impact of higher oil prices is again becoming a net negative", UBS economists said in a research note. The group previously agreed to curb their output by about 1.8 million barrels per day to boost oil prices and clear a supply glut.

Among the other favorable factors were chances of an extension in the Saudi-led OPEC output cut deal and geopolitical tensions as well as news of a drop in US oil inventory.

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled mixed on Tuesday with U.S. crude posting a loss and Brent closing higher.

Crude oil prices fell Wednesday after the Energy Information Adminstration reported a massive increase in crude oil stockpiles. US refineries produced about 10 million barrels of gasoline a day last week, down by about 500,000 barrels compared to the prior week.

At 0509 GMT, July WTI crude oil is trading $71.91, down $0.29 or -0.39% and July Brent crude oil is at $79.06, down $0.51 or -0.64%.

"A 5.8 million-barrel build is kind of like a slap in the face, where it's like, 'Where did this oil come from?' And as you look through the numbers, it doesn't make a lot of sense", said Phil Flynn, analyst at Price Futures Group in Chicago.

U.S. crude added 24 to $72.48 per barrel and Brent rose 17 cents to $79.33 on Monday (May 22).

In Canadian dollar terms, the price of WTI is now where it was, on average, during what Porter called the "go-go years for oil prices", between 2007 and 2014.

Saudi Arabia and other major OPEC producers could in theory add more supply, but have yet to do so.

Crude finds support at $70.52 a barrel after losing more than $2 in the last two days.

Related news