Oil rises as reality dawns over Venezuela's export
crisis
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[June 07, 2018]
By Amanda Cooper
LONDON (Reuters) - Oil rose on Thursday on
concerns about a plunge in exports from Venezuela, although surging U.S.
production kept gains in check.
Brent crude futures <LCOc1> were up 23 cents at $75.59 a barrel by 0900
GMT, while U.S. West Texas Intermediate (WTI) crude <CLc1> was 14 cents
higher at $64.87 a barrel.
Venezuela, which faces the threat of U.S. sanctions and is in the midst
of an economic crisis, is nearly a month behind delivering crude to
customers from its main oil export terminals, according to shipping
data, and chronic delays and production declines could breach state-run
PDVSA's supply contracts if backlogs are not cleared soon.
Tankers waiting to load more than 24 million barrels of crude, almost as
much as state producer PDVSA shipped in April, are sitting off the OPEC
member's main oil port, according to shipping data.
"Troubles over supply from Venezuela come at a time when OPEC is
considering easing supply cuts which have been in place since 2017 and
were implemented to support the price," London Capital Group head of
research Jasper Lawler said.
"The big question for oil is whether or not OPEC decides to ease the
production cuts, with the meeting still some two weeks away, oil traders
could be in for an increased bout of volatility."
Venezuela's supply problems have materialised while the Organization of
the Petroleum Exporting Countries has voluntarily cut output since 2017
to help bring global output in line with demand.
The group, led by Saudi Arabia, has complied with its commitment to
limit production, but not every member has cut voluntarily. Aside from
Venezuela, Angola has also seen output decline rapidly from its ageing
fields.
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A pump jack is seen at sunrise near Bakersfield, California October
14, 2014. REUTERS/Lucy Nicholson
The group meets in Vienna, together with top non-OPEC producer Russia, on June
22 to discuss its supply policy.
OPEC-member Iraq said on Wednesday a production increase was not on the table.
This followed an unofficial request from the United States asking OPEC's
effective leader Saudi Arabia to boost output.
To view a graphic on OPEC/non-OPEC crude output changes y/y in April, click:
https://reut.rs/2M7cKC7
Outside OPEC, however, crude output continues to rise, especially in the United
States, which is fast closing in on Russia's position as the world's largest
producer, as supply approaches 11 million bpd.
U.S. crude inventories rose by 2.1 million barrels in the week to June 1, to
436.6 million barrels, the Energy Information Administration said on Wednesday.
Surging U.S. production has pushed the discount of WTI futures to Brent to more
than $10 a barrel <CL-LCO1=R>.
To view a graphic on Top oil producers, click: https://reut.rs/2M7nuR1
(Additional reporting by Meng Meng and Aizhu Chen in Beijing; Editing by Susan
Fenton)
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