0-Oil rallies to multi-year highs on Venezuela worries

25 May, 2018, 21:39 | Author: Arnold Perez
  • Oil prices slump as Saudi Arabia and Russia consider output boost

The increase in US inventories came from a combination of reduced exports and rising imports; the latter is somewhat surprising, Flynn said, because Brent crude is currently trading at a $7 premium to USA crude, making exports more advantageous right now. Many developing countries cut or abolished fuel subsidies during the oil-price slump three years ago.

As the daily chart below shows, the price remains within a rising channel in place since mid-April but a slide towards the channel support line seems possible after those two successive failed attempts to top $80, which is seen as an important level psychologically.

"If prices get above there, that will further intensify and increase the likelihood that OPEC will do something".

The government, however, is still exploring its options and has asked for the public's understanding of the fact that rising oil prices are something the government can not control. Gasoline stockpiles also rose according to the EIA, hinting that United States drivers are resisting USD3/gal at the pump. "With oil moving to $80, that has brought on the consumer demand".

Bank of America said earlier this month that oil could rally to $100 by the middle of next year, a view echoed by veteran developing-nation investor Mark Mobius.

The Organization of the Petroleum Exporting Countries may decide in June to lift output to make up for reduced supply from crisis-hit Venezuela and Iran, which was stung by the U.S. decision to withdraw from the nuclear arms control deal, Opec and oil industry sources told Reuters.

Oil prices slump as Saudi Arabia and Russia consider output boost
MID-DAY: Oil continues to slump on reports of higher production; North Korea US tensions weight Wall Street

Additionally, senator Lisa Murkowski, a republican who chairs the U.S. Energy Committee, said that while "OPEC's supply restrictions are higher and should be better.I'm stunned to hear my colleagues encouraging more production from the likes of Iran and Saudi Arabia, rather than right here in America". "No good and will not be accepted!".

On Friday, Russian Energy Minister Alexander Novak said that some of the world's leading producers are likely to put more oil on the market starting in third quarter 2018.

Trump may be a hostage to a fortune of his own making, after blaming former President Barack Obama for high gasoline prices when his predecessor was in power. Brent crude futures were up 24 cents, at $79.81/Bbl by 2:29 p.m. ET, rebounding from a brief slide after the EIA data.

Oil prices have risen above a "sweet spot" between $50 and $70 a barrel that encourages global growth, CNBC.com cited UBS as saying. Those gains are now translating all the way along the oil futures curve, including contracts for delivery in late 2021, 2022 and 2023.

The news should have pressured oil prices, but the comments weakened the U.S. dollar, which supported crude, Commerzbank strategist Carsten Fritsch said.

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