Brent price edges up after hint of cut in Venezuela oil exports
SINGAPORE/TOKYO (Reuters) – Brent crude futures rose more than one percent on Wednesday after Venezuela raised the prospect of halting some crude oil exports, according to people familiar with the matter, but gains were capped amid reports the US government had asked Saudi Arabia and some other Organization of the Petroleum Exporting Countries (OPEC) producers to increase output.
Falling production from Venezuela has contributed to a rally in global oil price of Brent to nearly $80 a barrel. State firm PDVSA is considering declaring force majeure on some exports, three sources told Reuters, amid plummeting output from its oil fields and tanker bottlenecks at ports.
Brent crude rose 78 cents to $76.16 a barrel by 0645 GMT after dropping to its lowest since May 8 on Tuesday. US West Texas Intermediate (WTI) crude futures were up 33 cents at $65.85 a barrel, having touched a near two-month low on Tuesday.
“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, a risk manager at Mitsubishi Corp. “$80 is a temporary ceiling for oil until we hear from OPEC.”
The OPEC and Russia will meet on June 22-23 to decide how much production they will increase as global inventories have tightened while Venezuela’s production has dropped more than expected. US sanctions on Iran are also threatening to reduce oil exports from the OPEC producer.
The US government has weighed in on the decision by putting in unofficial requests to Saudi Arabia and some other OPEC producers to increase output, sources said on Tuesday.
“At the moment, the oil price is being driven by OPEC and views on how much and how quickly OPEC plus will raise output,” Energy Aspects analyst Virendra Chauhan said.
Reuters reported on May 25 that the producers were considering a supply increase of one million barrels per day, with a final decision to be made at the June meeting in Vienna.
WTI’s discount to Brent widened 42 cents to $10.34 a barrel as the global benchmark rose more than US crude futures.