Oil gains on Venezuela export cuts, OPEC production levels

WTI Crude Oil

Daily July WTI Crude Oil

A day before US President Donald Trump withdrew from the Iran nuclear deal, one of his senior officials phoned Saudi Arabia to ask the world's largest oil exporter to help keep prices stable if the decision disrupted supply.

Venezuela wrote to fellow OPEC members urging them to unite against US sanctions, echoing a similar letter from Iran, according to people with knowledge of the matter.

More generally, Brent has been pushed up by the voluntary production cuts put in place a year ago, led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation.

Industry data released yesterday from the American Petroleum Institute had said USA crude inventories fell by 2M barrels last week.

"Oil prices are being clobbered by a surprise build to crude stocks as total imports jumped higher, blunting the impact of higher refinery runs", said Matthew Smith, director of commodity research at ClipperData in Louisville, Kentucky. The US was anxious that the sanctions on Iran would move oil prices up. The producers have been considering a supply increase of up to 1 million barrels per day, sources told Reuters. However, the deal will expire at the end of this year.

Oil prices were stable on Friday, supported by Venezuela's struggles to meet its supply obligations and by ongoing output cuts led by producer cartel OPEC, although surging USA crude output was looming over markets.

Outside OPEC, however, there were ongoing signs of rising output.

Saudi Aramco has raised its July price for its Arab Light grade for Asian customers by 20 cents a barrel versus June to a premium of $2.10 a barrel to the Oman/Dubai average, it said on Tuesday. U.S. crude oil stockpiles were forecast to have fallen for the second consecutive week, a preliminary Reuters poll showed on Monday.

OPEC exports increased to 578 billion dollars previous year from 451,800 million dollars in 2016, stressed the group's Annual Bulletin of Statistics 2018.

OPEC will meet on June 22 and needs a consensus of all members to officially change its output policy. USA proved reserves totaled about 33 billion barrels, according to the OPEC bulletin.

Brent futures for August settlement added as much as 29 cents, or 0.4%, to $77.61/bbl on the London-based ICE Futures Europe exchange. PVM Oil Associates strategist Tamas Varga said, Reuters reported.

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