SINGAPORE: 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 ongoing strong demand.
Brent crude oil futures LCOc1 were at 74.42 per barrel at 0135 GMT, up 42 cents, or 0.6 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 33 cents, or 0.5 percent, 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 Organization of the Petroleum Exporting Countries (OPEC).
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.
Venezuela’s crude production PRODN-VE 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 PDVSA.
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 C-STK-T-EIA 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 C-OUT-T-EIA 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.
“The market does look a little toppish,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader. —Reuters