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Crude Oil Rallies on Geopolitical Tensions, Russian Supply

May 27, 2019 at 20:31 by Vladimir Vyun

Futures for crude oil jumped today amid expectations that US sanctions against Iran and Venezuela will result in lower supply from those countries. The commodity also got boost from news that Russian supply dwindled due to contamination of the Druzhba pipeline to Europe. Sources told Reuters that Russia’s exports via Transneft pipelines fell 6% in May compared with April. Russia was producing 11.126 million barrels per day on average between May 1 and 26, down from the average of 11.147 million bpd between May 1 and 21.

Kuwait’s oil minister Khaled al-Fadhel told Reuters that he expects oil markets to be balanced by the end of this year, though he also mentioned negative factors, like the US-China trade war and rising US shale oil production. Indeed, the new developments in the trade spat between the world’s two biggest economies led market participants to believe that there will be no compromise in the near future. That boosted the US dollar, putting pressure on dollar-priced commodities, though crude managed to avoid losses so far.

The CFTC Commitment of Traders report showed that hedge funds and money managers reduced their net long positions on light sweet crude oil by 26,868 as of May 21.

Contract for delivery of WTI crude oil in July rose 1.04% to $59.24 per barrel as of 20:34 GMT on NYMEX today. Brent crude jumped as much as 2.07% to $70.11 per barrel on ICE.

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