Oil edges up on Venezuela and Iran sanctions, OPEC supply cuts

Oil edges up on Venezuela and Iran sanctions, OPEC supply cuts

Oil edges up on Venezuela and Iran sanctions, OPEC supply cuts

Oil prices rose early Thursday after a commercial inventories report in the United States released yesterday revealed a smaller stockpile buildup than analysts expected.

U.S. WTI futures were up 0.07 percent as of 2:16 p.m. HK/SIN to $52.26 per barrel.

Brent opened Monday at $65.21 per barrel while WTI traded at $55.94 per barrel.

Waivers by the United States now in place allowing eight countries to purchase Iranian oil are set to expire in May, and there will be increasingly in coming weeks uncertainty regarding renewal. However, the coming years could see some problems for OPEC, with America's growing energy independence and eventually oil exports will further exert downward pressures on prices.

The other influencing factor is the high level of compliance among OPEC and non-OPEC members to slash their crude oil production.

Investment bank Jefferies on Friday said that us output growth was largely being fueled by onshore shale production, which had recently benefited from investments by oil majors Exxon Mobil and Chevron.

The sanctions against Iran were announced in May.

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It would be recalled that OPEC and 10 non-OPEC countries agreed in December to cut oil production by 1.2 million barrels per day effective from January for an initial period of six months to help balance the market and support prices.

US majors ExxonMobil and Chevron announced plans on Tuesday to each raise production in the Permian basin by around 1 million barrels per day (bpd) over the next five years.

Within the U.S. sanctions against Iran, Washington granted its biggest buyers - mostly in Asia - waivers when the measures were re-introduced in November 2018 that would allow them to buy limited amounts of crude for another 180 days.

It would also be recalled that President Muhammadu Buhari had said last month that the country could consider a reduction in crude oil production in support of efforts to shore up the price of the commodity.

Next year's oil prices are expected to be in the $63 to $68 per barrel range according to expectations from 11 investment banks.

Oil prices edged higher on Wednesday, supported by OPEC-led supply cuts and US sanctions against exporters Venezuela and Iran, but gains were capped by falling stock markets and renewed concerns over demand growth.

Also on Wednesday, even though the U.S.' crude oil production decreased slightly by 5,000 barrels per day (bpd), it remained at a record high of around 12.1 million bpd for the week ending March 1, the EIA data showed. There were also concerns about a potential economic slowdown curbing crude oil demand.

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