Forexserve Logo
Committed To Deliver
about us - Forexserve
Login
Username :
Password :
 
 
Market Bytes

arrow All News
 
Our Services
    Mapping Balance Sheet Exposures
    Setting up Risk Management Framework
    Pricing of Forex, Interest Rates and commodity Derivatives
    Middle and Back Office Support
    Training on Currency Risk Management Techniques

arrow List All Services
 
 Market Bytes News
Oil prices rise on Iran sanctions worries, falling Venezuelan output (Thursday, April 26, 2018)

Oil prices rose on Thursday, supported by an expectation that the United States will re-impose sanctions against Iran, a decline in output in Venezuela and on-going strong demand.

Brent crude oil futures were at 74.42 per barrel, up 42 cents, or 0.6%, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 33 cents, or 0.5%, at $68.38 per barrel.

Traders said markets rose on expectations that the United States will in May re-impose sanctions against Iran, a major oil producer and member of the OPEC.

French President Emmanuel Macron said on Wednesday during a state visit to the United States that he expected Trump to pull out of a deal with Iran reached in 2015, in which Iran suspended its nuclear program in return for western powers lifting crippling sanctions.

U.S. President Donald Trump will decide by May 12 whether to restore U.S. sanctions on Tehran, which would likely result in a reduction of its oil exports.

Declining output in Venezuela has been pushing oil prices further, OPEC’s biggest producer in Latin America.

Venezuela’s crude production has fallen from almost 2.5 million barrels per day (bpd) in early 2016 to around 1.5 million bpd due to political and economic turmoil.

U.S. oil major Chevron Corp has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state-owned oil company.

Venezuela’s plunging output and looming U.S. sanctions against Iran come against a backdrop of strong demand, especially in Asia, the world’s biggest oil consuming region.

However, not all market indicators point towards tighter supplies.

U.S. crude oil inventories rose by 2.2 million barrels in the week to April 20, to 429.74 million barrels. That’s almost 10 million barrels above the five-year average.

U.S. crude production rose by 46,000 barrels per day (bpd) on the previous week, to 10.59 bpd. That’s an increase of more than a quarter since mid-2016.

American crude oil output has overtaken that of top exporter Saudi Arabia. Only Russia currently produces more, at around 11 million bpd.

With U.S. output surging, some analysts warn that the 20% climb in Brent prices since February is starting to look overdone.