Oil slips further below $80 a barrel as focus on OPEC
intensifies
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[May 24, 2018]
By Amanda Cooper
LONDON (Reuters) - Oil prices recorded
their largest one-day drop in two weeks on Thursday, with expectations
building that OPEC will end an output deal that has been in place since
the start of 2017 due to concerns about supplies from Venezuela and
Iran.
Benchmark Brent <LCOc1> futures were down $1.08 at $79.72 a barrel by
1118 GMT, its largest one-day fall since May 8, while U.S. crude futures
<CLc1> dropped 86 cents to $70.98 a barrel.
"This discussion about possible OPEC supply increases after the June
meeting has put a brake on the oil price for the time being, so $80 is a
big hurdle to overcome," Commerzbank strategist Carsten Fritsch said.
"If prices get above there, that will further intensify and increase the
likelihood that OPEC will do something .. It's going to be very
difficult to overcome this level on a sustainable basis before the OPEC
meeting."

The Organization of Petroleum Exporting Countries may decide in June to
lift output to make up for reduced supply from Iran and Venezuela and in
response to concerns from Washington about a rally in oil prices, OPEC
and oil industry sources told Reuters.
Venezuela's output has fallen amid an economic crisis, while Iran's
supply is threatened by U.S. sanctions.
These factors have helped push Brent and WTI to multi-year highs, with
Brent breaking through an $80 threshold last week for the first time
since November 2014.
"The chat is still that OPEC will do something at its June meeting in
reaction to the looming prospect of a fall in crude production and
exports from both Iran and Venezuela as the year progresses," said Greg
McKenna, chief market strategist at CFD and FX provider AxiTrader.
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A worker walks past the oil well at the Sindbad oil field near the
Iraqi-Iranian border in Basra, Iraq April 23, 2018. Picture taken
April 23, 2018. REUTERS/Essam Al-Sudani

OPEC and some non-OPEC major oil producers, which are scheduled to meet in
Vienna on June 22, previously agreed to curb their combined output by about 1.8
million barrels per day (bpd) to boost oil prices and clear a supply glut.
Global inventories have been broadly falling. But commercial U.S. crude
inventories rose <C-STK-T-EIA> by 5.8 million barrels in the week to May 18,
beating analyst expectations for a drop of 1.6 million barrels, the Energy
Information Administration (EIA) said on Wednesday.
The premium of Brent crude over U.S. West Texas Intermediate futures neared $8 a
barrel, close to its widest in three years. <CL-LCO1=R>
Inventories of gasoline rose by 1.9 million barrels in the same week, just ahead
of the Memorial Day holiday in the United States which typically marks the start
of the summer driving season.
Refinery runs fell 7,000 bpd to 16.63 million bpd, 3.8 percent below the same
week last year, according to the EIA data.
(Additional reporting by Jane Chung in Seoul and Jessica Jaganathan in
Singapore; Editing by Adrian Croft and Edmund Blair)
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