Oil rises amid concern about Venezuelan exports

Singapore/Tokyo — Global oil prices rose during Asian trade on Wednesday after Venezuela raised the prospect of halting some crude exports, according to people familiar with the matter, but gains were capped amid reports the US government had asked Saudi Arabia and some other Opec producers to increase output.

Falling production from Venezuela has contributed to a rally in global oil price Brent to nearly $80 a barrel. State firm PDVSA was considering declaring force majeure on some exports, three sources told Reuters, amid plummeting output from its oilfields and tanker bottlenecks at ports.

Brent crude rose 27c to $75.65 a barrel by 4.12am GMT after dropping to its lowest since May 8 on Tuesday. US West Texas Intermediate (WTI) crude futures were up 29c at $65.81 a barrel, having touched a near two-month low on Tuesday.

Oil cartel Opec and Russia will meet on June 22-23 to decide how much production they will increase as global inventories have tightened while Venezuela’s production has dropped more than expected. US sanctions on Iran are also threatening to reduce oil exports from the Opec producer.

The US government had weighed in on the decision by putting in unofficial requests to Saudi Arabia and some other Opec producers to increase output, sources said on Tuesday.

“At the moment, the oil price is being driven by Opec and views on how much and how quickly Opec plus will raise output,” Energy Aspects analyst Virendra Chauhan said.

Reuters reported on May 25 that the producers were considering a supply increase of 1-million barrels a day, with a final decision to be made at the June meeting in Vienna.

WTI’s discount to Brent narrowed 4c to $9.88 a barrel after industry data showed US crude inventories fell by 2-million barrels, compared with analyst expectations for a decrease of 1.8-million barrels, American Petroleum Institute (API) data showed.

Investors are waiting for the official inventories report to be issued by the US Energy Department’s Energy Information Administration at 2.30pm GMT.

Reuters