Oil Prices Hold Steady as Venezuela Supply Returns and Iran Risks Mount
Oil prices held steady on Wednesday after four days of gains as Venezuela resumed exports and U.S. crude and product inventories rose, though fears of Iranian supply disruptions due to deadly civil unrest loomed over the market.
Brent futures were down 11 cents, or 0.2%, at $65.36 a barrel at 1003 GMT. U.S. West Texas Intermediate crude was down 10 cents, or 0.2%, at $61.05 a barrel.
“The oil market has been driven by geopolitics, by anxiety. But if that doesn’t turn into actual supply or export disruption, people start to get disillusioned,” said Tamas Varga, oil analyst at PVM.
Significant crude and product builds in the U.S., reported by the American Petroleum Institute late on Tuesday, provided an excuse for traders to take profit, Varga said.
Crude stocks in the U.S., the world’s biggest oil consumer, rose by 5.23 million barrels in the week ended January 9, the API reported, citing market sources.
Gasoline inventories rose by 8.23 million barrels, while distillate inventories rose by 4.34 million barrels from a week earlier.
Stockpile data from the U.S. Energy Information Administration will be released later on Wednesday. On Tuesday, a Reuters poll showed that U.S. crude oil stockpiles were expected to have fallen last week, while gasoline and distillate inventories likely rose.
Also weighing on prices, Organization of the Petroleum Exporting Countries (OPEC) member Venezuela has begun reversing oil production cuts made under a U.S. embargo as crude exports were also resuming, three sources said.
Two supertankers departed Venezuelan waters on Monday with about 1.8 million barrels each of crude in what may be the first shipments of a 50-million-barrel supply deal between Caracas and Washington to get exports moving again in the wake of the U.S. capture of Venezuelan President Nicolas Maduro.
Mounting protests in Iran, however, have increased fears of supply disruptions from the fourth-largest OPEC producer. U.S. President Donald Trump on Tuesday urged Iranians to keep protesting and said help was on the way, without specifying what that meant.
“Protests in Iran risk tightening global oil balances through near-term supply losses, but mainly through rising geopolitical risk premium,” Citi analysts said in a note, raising their outlook for Brent over the next three months to $70 a barrel.
The Citi analysts noted that so far the protests have not spread to the main Iranian oil-producing areas, which has limited the effect on actual supply.
“Current risks are skewed toward political and logistical frictions rather than direct outages, keeping the impact on Iranian crude supply and export flows contained,” they said.
Reporting by Anna Hirtenstein in London. Additional reporting by Katya Golubkova in Tokyo and Emily Chow in Singapore. Editing by Christian Schmollinger and Mark Potter
This article was first first reported by Reuters
