US sanctions against Iran, Venezuela crisis in focus
An offshore oil rig off the coast of Norway.
Nerijus Adomaitis | Reuters
Oil prices fell on Thursday, shrinking record in US crude production which led to an increase in stocks.
Outside the United States, however, the oil markets were excluded as exceptions to US sanctions against Iran, expired, a political crisis in Venezuela escalating, and as the producer club OPEC retains the sources of supply.
Spot Brent crude futures were $ 71[ads1].91 per barrel at 0239 GMT, 27 cents, or 0.4 percent, during their last close.
US Raw futures in West Texas Intermediate (WTI) were down 19 late, or 0.3 percent, at $ 63.31 per barrel.
"Crude oil prices fell sharply as stocks in the US rose to their highest level since 2017," ANZ Bank said on Thursday.
"This comes as US refineries enter the spring's maintenance period, and fear that the crude oil demand will be soft and stocks will continue to rise," it added.
U.S. Raw stock last week rose to its highest since September 2017, jumped by 9.9 million barrels to 470.6 barrels, as production achieved record highs of 12.3 million barrels per day (bpd), while refining activity declined, Energy Information Administration informed (EIA) Outside the United States, oil markets continued to close in the midst of the Venezuela political crisis, tighter US sanctions against Iran, which do not allow multiple exceptions from May, and as OPEC's Oil Producing Organization (OPEC)
Oman's Energy Minister Mohammed bin Hamad al- Rumhy said Wednesday it was OPEC's goal to expand the cuts that were started in January when they meet in June.
] Despite the many OPEC members' desire to maintain the supply procedures to support the market, the Group may be forced to act.
"The Venezuelan situation is likely to be great in OPEC considerations as ministers weigh how many extra barrels may be needed to fill a growing supply gap driven by geopolitics as opposed to geology," said Canadian bank RBC Capital Markets. ] Beyond Venezuela, analysts at Fitch Solutions also warn of the risk of supply from Libya, where a civil war threatens to cut oil fields from markets.
The risk here is not insignificant in view of increasing instability in a number of key producers, especially Libya and Venezuela. , Fitch Solutions says.
Industry yields hover
For manufacturers, they mean tight market conditions higher profits.
Analysts at Bernstein Energy said the current price level reflected the average marginal cost for most listed oil producers.
"We have surveyed the 50 largest listed oil and gas companies globally … Based on the 2018 annual report we estimate that the world's marginal oil price will remain at $ 71 a barrel, "Bernstein said in a note on Thursday.
"This is in line with today's spot prices, but higher than the long-term oil price of $ 61 per barrel," the note says. [19659002] "With oil prices rising more than costs, industrial margins increased by more than 200 percent in 2018," Bernstein said, resulting in industry profitability "at the highest in the last 5 years."
