USA crude stockpiles rise unexpectedly in week


In addition, market participants fear that the Organization of countries-exporters of oil (OPEC) can in June to increase production because of the risks associated with Venezuela and Iran.

The large increase surprised the market, which was expecting a decline based on earlier industry data and a weekly poll of analysts by Reuters.

"The large rise in crude oil inventories made for a bearish report, and it came as a result of decent sized drop in exports, along with a large increase in imports", said John Kilduff, a partner at Again Capital LLC in NY.

Brent crude futures slipped 23 cents to settle at $79.80 a barrel, while US crude lost 36 cents to $71.84 a barrel.

July futures for Brent oil at the London ICE Futures exchange to 8:08 Moscow time has fallen in price on $0,14 (0,18%) to $78,65 per barrel.

US crude stockpiles are forecast to have declined by 2.8 million barrels last week, which would be the third straight weekly fall. Distillate stockpiles, which include diesel and heating oil, fell by 1 million barrels, versus expectations for a 1.3-million-barrel drop.

Mike Pompeo Promises 'Strongest Sanctions In History' On Iran
About the proposal for a treaty rather than an agreement, Pompeo said, "A treaty would be our preferred way to go". Secretary of State Mike Pompeo is threatening to place "the strongest sanctions in history" on Iran .

The benchmarks are diverging as rising inventories in the USA weigh on American futures while risks to supply from Iran to Venezuela buoy Brent.

The Organisation of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers led by Russian Federation started withholding output in 2017 to tighten the market and prop up prices.

While Russia and OPEC benefit from higher oil prices, up nearly 20% since the end of a year ago, their voluntary output cuts have opened the door to other producers to ramp up production and gain market share.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

Oil prices had a "swift reaction today to the musings by OPEC to potentially add more supply to the market".

Venezuela's large export decline and worldwide condemnation of President Nicolas Maduro's re-election this week, which has started triggering new sanctions, is creating tension in the global oil market. Prices were further propped up by a significant oil production decrease in Venezuela - it saw April oil production in the Latin America country drop to 1.5 million barrels per day, a new long-term low, according to Reuters.