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Oil Rallies on Venezuela’s Supply Woes, OPEC Production Outlook

June 7, 2018 at 17:59 by Vladimir Vyun

Crude oil rallied today amid constantly falling supply from Venezuela and hopes that the Organization of Petroleum Exporting Countries will maintain production caps. Venezuela’s state-run PDVSA was chronically late with deliveries, with a backlog of more than 24 million barrels waiting to be loaded at the country’s main port.

There were reports that the day before US President Donald Trump withdrew from the Iranian nuclear deal the United States contacted Saudi Arabia, Iran’s chief rival and a US ally, with a request to compensate for potential supply loss from Iran to prevent a spike of oil prices. But there were signs of push back from other OPEC members as Algerian Minister of Energy Mustapha Guitouni said that the OPEC and its allies should focus on maintaining the supply-demand balance and preserving market stability.

Yesterday, the Energy Information Administration reported that US crude oil inventories increased by 2.1 million barrels last week. Ahead of the report, analysts had predicted a decline by about the same amount.

Futures for delivery of WTI crude oil in July gained 1.7% to $65.83 per barrel as of 17:46 GMT on NYMEX today. August contact for Brent crude jumped as much as 2.23% to $77.04 per barrel on ICE.

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