Oil prices edge down, but concerns persist over Iran supplies

Apr 29, 2018, 13:33
Oil prices edge down, but concerns persist over Iran supplies

Oil pumps are seen at sunset outside Vaudoy-en-Brie, near Paris, France April 23, 2018.

Crude oil futures fell 0.29 per cent to Rs 4,545 per barrel today in line with a weak overseas trend.

Macron's incendiary remarks against Trump one day after he was seen smiling and joking with the US president caused traders to boost West Texas Intermediate by 14 cents to $68.19 per barrel and Brent by 74 cents to $74.74; in addition to Macron predicting that the USA will withdraw from the Iran deal in coming weeks (which he admitted was based on nothing more than a gut feeling), he described the reversal of US policy on global agreements - including the Paris climate accord - as "insane".

Brent gained about 0.5 percent this week - its third consecutive weekly gain - while WTI posted a weekly loss of about 0.5 percent.

At 0754 GMT, June WTI crude oil futures are trading $67.93, down $0.25 or -0.37% and June Brent crude oil is at $74.60, down $0.14 or -0.19%.

Iran negotiated the agreement - providing for curbs on its nuclear program in return for relief from numerous sanctions weighing on its economy - with China, France, Russia, Germany, the United Kingdom and the U.S.in 2015.

The prospect of new sanctions on Iran threatens to further tighten supply in the oil market.

"That's the biggest factor right now that's driving the market". The gains came despite a higher dollar, which is at its strongest since January 12 against a basket of currencies.

A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies.

Concerns about market tightness have also been fuelled by the deteriorating political and economic situation in Venezuela that has led to a 40 percent decline in crude output in the past two years.

Price increases have been capped by rising USA production as shale drillers ramp up activity, underpinning a widening discount between Brent and WTI.

Venezuela's crude production has fallen from nearly 2.5 million barrels per day (bpd) in early 2016 to around 1.5 million bpd due to a political and economic crisis.

Futures had been under selling pressure on Tuesday as traders took profit after a recent bull run that had lifted the price of benchmark Brent to over $75 per barrel.

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