Markets

Oil Declines After Unexpected Increase in US Crude, Gasoline Stockpiles

Oil Declines After Unexpected Increase in US Crude, Gasoline Stockpiles

The prospect of outages in Iran has changed the equation because the losses, while not inevitable, would be decisive to an oil market that now has little margin for error.

The price drop of both WTI and Brent crude oil this week is being attributed to sanctions on Iran and increased sanctions on Venezuela following last weekend's re-election of Nicolas Maduro.

Meanwhile, oil benchmarks fell on Wednesday after an unexpected build in US crude and gasoline inventories despite strong demand, and as traders weighed the possibility of an increase in OPEC crude output to cover any shortfalls in supply from Iran and Venezuela. But today I wanted to highlight technical factors rather than fundamentals as the chart of Brent looks quite interesting.

In Washington, Democrats are using high gasoline prices, approaching the $3 a gallon level for the first time since October 2014, to accuse the Trump administration of not doing enough to shield consumers.

Fawad Razaqzada is market analyst at FOREX.com and City Index brands of Gain Capital.

Venezuela's output has fallen amid an economic crisis, while Iran's supply is threatened by US sanctions.

This is a move that analysts say could further curb the country's oil output, already at its lowest in decades.

Putin, Assad hail achievements in Syria
He also reportedly hailed progress in fighting "terrorism", which "opens the door to the political process". The two leaders discussed the ongoing clashes in Syria between pro-Assad forces and civilian rebels.

The oil group is scheduled to meet with top non-OPEC producers in Vienna June 22, but sources told Reuters that Saudi Energy Minister Khalid al-Falih is scheduled to meet with officials from Russian Federation and the United Arab Emirates this week to discuss increasing production.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories fell by 1.3 million barrels in the week ending May 18.

The deal, which has been extended until the end of 2018, has led to that glut disappearing and prices have recovered from around $30 per barrel to around $80.

USA crude inventories increased 5.778 million barrels to 438.132 million barrels last week, EIA data showed. "The global sweet spot - where oil prices may have positively contributed to global growth - seems to be somewhere between $50/bbl and $70/bbl", CNBC cited UBS sa saying.

THE government is looking to get oil from countries outside the Organization of Petroleum Exporting Countries (Opec) in order to cushion the impact of rising oil prices, Malacañan Palace said on Thursday.

Saudi Arabia and other major OPEC producers could in theory add more supply, but have yet to do so.

Crude imports rose 558,000 b/d last week to 8.159 million b/d, while exports dropped 818,000 b/d to 1.748 million b/d.