Published: Sun, April 29, 2018
Worldwide | By Victor Meyer

Crude Oil Holds Above $68

Crude Oil Holds Above $68

Oil prices on Thursday morning, April 26, rose amid expectations of the resumption of us sanctions against Iran, declining output in Venezuela and ongoing strong demand. Subscribe on Apple Podcasts.

The effect of EIA's latest inventory report on oil prices would be interesting to watch; API's figures seemed to remind market players that not all fundamentals are bullish for oil, with USA oil production continuing to be the main headwind for OPEC's plans to push up prices higher.

U.S. President Donald Trump will decide by May 12 whether to reimpose sanctions on Iran that were lifted as part of an agreement with six other world powers over Tehran's nuclear program.

WTI (West Texas Intermediate) crude-oil futures slipped after failing to breach the more than four-year highs of $66.66 per barrel set in January of this year.

Punch also reports that the EIA showed that the United States crude oil exports averaged 1.12 million bpd a year ago, with the highest daily export of 1.73 million bpd recorded in October.

"One might wonder what is behind this increase when the dramatic surge in USA crude production signalled just recently a balanced global oil market and the price of WTI staying at around US$60 a barrel", says the report.

On Wednesday, the indexes continued a lower trend. "In addition, the risk to this scenario is on the upside for the short term if new sanctions are imposed on Iran", leading up to the May 12 OPEC meeting.

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"President Trump said the Iran nuclear deal was insane and ridiculous, yet that does not mean necessarily that he is going to back out of it", Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter.

The US 10 year Treasury yield has drifted back below 3% overnight (it now sits at 2.99%).

There is a price divergence in the market that could raise some concerns amongst traders.

Dutch bank ING said "the wide discount for WTI to Brent saw exports rising 582,000 bpd week-on-week to a record high of 2.33 million bpd".

"All we're seeing is very strong pricing and the slight softening is primarily due to a stronger dollar", said Bjarne Schieldrop, SEB chief commodity analyst. Official data from the US EIA will be released later today.

Crude imports climbed 539,000 b/d last week to 8.469 million b/d, while refinery utilization rates averaged 90.8% for the week ending April 20, down 1.6%.

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