Oil dips on report of rising US crude stockpiles, but market remains tense

Oil prices dipped on Wednesday after a report showed a rise in available U.S. crude inventories, but the market remained tense amid an intensifying political crisis in Venezuela, tightening U.S. sanctions on Iran and continuing OPEC supply cuts.

Spot Brent crude futures, the international benchmark for oil prices, were at $71.65 per barrel at 0143 GMT, down 41 cents, or 0.6 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 51 cents, or 0.8 percent, at $63.49 per barrel.

U.S. crude stocks rose by 6.8 million barrels to 466.4 million barrels in the week to April 26, industry group the American Petroleum Institute (API) said on Tuesday, implying a rise in U.S. crude supply.

“Crude prices are off … after the weekly API oil inventory report showed a build of 6.8 million barrels, up from the draw of 3.1 million barrels we saw last week,” said Edward Moya, senior market analyst at futures brokerage OANDA.

However, focus was shifting to the crisis in major oil producer Venezuela, where there appears to be a standoff between incumbent President Nicolas Maduro and opposition leader Juan Guaido. Many observers fear this could lead to large-scale violence, as well as disruptions to crude supply.

Crude markets have tightened this year due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and beefed up U.S. sanctions on Iran’s oil exports.

Washington re-imposed sanctions on Tehran in November last year, but initially allowed its major buyers to import limited crude volumes for another six months.

That period expires on Wednesday, and Washington has said it will not extend any sanction exemptions as it aims to drive down Iranian crude exports to zero.

Despite this, some analysts say global oil markets are amply supplied.

Reuters

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya