Start trading now on Poste Italiane

Oil falls more that $1 a barrel on Venezuela deal hopes

|

kitten

© FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Erwin Seba

HOUSTON () -Oil futures fell more then $1 a barrel on Monday as expectations rose the U.S. and Venezuela could soon reach a deal easing sanctions on Venezuelan crude exports, while traders said the Israel-Hamas conflict did not appear to threaten oil supplies in the short term.

futures settled at $89.65 a barrel, down $1.24, or 1.4%. U.S. West Texas Intermediate crude (WTI) fell $1.03, or 1.2%, to finish at $86.66 a barrel.

Venezuela’s government and opposition will return to political negotiations this week after nearly a year, the two sides said, while sources said the U.S. has reached a preliminary deal to ease sanctions on Venezuela’s oil industry in return for a competitive, monitored presidential election in Venezuela next year.

“The reported deal … would help to raise the country’s oil output from very depressed levels,” said William Jackson, chief emerging markets economist for Capital Economics.

“But the sector requires enormous investment to return output to the levels seen only a decade ago,” Jackson added. “And this wouldn’t materially affect the deficit in the global oil market in the near term.”

Both oil benchmarks had surged last week on fears the conflict in the Middle East could widen, with global benchmark Brent gaining 7.5% in its highest weekly gain since February.

Monday’s falling prices appeared to “a breather to take in events in the Middle East” as opposed to expected production increases in Venezuela, said Andrew Lipow, president of Lipow Oil Associates.

“Negotiations with Venezuela could lead to a surge in exports of that is already in inventory,” Lipow said. “But a surge in production is a ways off given the decrepit state of the Venezuelan energy infrastructure.”

Traders said the war between Israel and the Palestinian Islamist militant group Hamas so far remained focused in the Gaza Strip.

“It’s more of the same on Monday in terms of the conflict in the Middle East being contained from affecting crude oil supplies,” said John Kilduff, partner with Again Capital LLC.

Israeli air strikes on Gaza intensified on Monday, after diplomatic efforts by the U.S. to arrange a ceasefire in southern Gaza failed.

Russia has also entered the diplomatic fray, with President Vladimir Putin set to hold talks with Iran, Israel, Palestinians, Syria and Egypt.

Heightened tensions in the Middle East may have compounded other risk factors to push prices higher last week, market sources said.

The U.S. last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the Group of Seven’s price cap of $60 a barrel, an effort to close loopholes in the mechanism designed to deprive Moscow of revenue for its energy sales.

“The sudden decision on tightening up of sanctions on ship owners carrying Russian crude over the $60/barrel limit by the U.S. started to niggle and so did the Russian/Saudi meeting concluded by President Putin stating that OPEC+ were achieving ‘stability,'” said PVM analyst John Evans, referring to the price rises at the end of last week.

Previous Post
Restart of Venezuela, opposition talks could lead to US sanction relief
Next Post
Bitcoin gives up gains after BlackRock denies ETF approval report

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed

Invest on crypto with Gianluca Vacchi project and start making money now
Win money trading on Amazon
INVEST NOW
keyboard_arrow_up