Oil Prices Fall On Higher US Crude Inventories

A new mega cartel is emerging in oil markets

Indeed, according to the U.S. Energy Information Administration (EIA), U.S. crude output from the seven major shale formations is likely to climb to 8.46 million bpd in May.

Venezuela's woes, combined with US crude production falling in February, resulted in another day of gains for Brent, which settled 76 cents higher at $72.80 per barrel, and for West Texas Intermediate, which rose 41 cents to $63.91 per barrel.

Hundreds of Venezuelans rallied on Tuesday after opposition leader Juan Guaido called for a "military uprising" in his strongest move to remove President Nicolas Maduro since declaring himself interim president earlier this year.

Outside the United States, however, oil markets remained tense as all exemptions to USA sanctions on Iran expire, the political crisis in Venezuela escalates, and as producer club OPEC keeps withholding supply.

Yes, Venezuela oil production and exports do not directly impact US oil inventories due to sanctions, but they do so indirectly if Venezuela is allowed to export its oil to another country that would otherwise import from the U.S.

In 2012, Goldberg was an aide to then-Senator Mark Kirk, a Republican, and delivered a blow to Tehran by writing legislation that closed Iran's last legal loophole in selling oil under the Obama sanctions.

Analysts at Bernstein Energy said in a note on Wednesday that given overall supply-and-demand fundamentals, "Brent oil is back to our expected fair value of $70 per barrel".

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Iranian President Hassan Rouhani reiterated that Tehran will continue selling its oil despite US sanctions and said Washington's policy of putting pressure on Iran would fail in practice.

"This, in addition to increasing US production, underscores our confidence that energy markets will remain well supplied".

The 14-member group pumped 30.23 million bpd this month, the survey showed, down 90,000bpd from March and the lowest Opec total since 2015.

"Our expectation is for Opec+ output to increase in the second half of 2019 as members chase higher oil prices but ultimately will contribute to an oversupplied market", said Edward Bell of Emirates NBD bank.

The United States is confident that the end of its waivers on imports of Iranian oil won't disrupt the world's oil supply.

Oil producers will meet on June 25-26 to decide whether to extend the pact or adjust supply targets.

But U.S. -based critics of Trump's sanctions have said that over the long term even U.S. allies will tire of having to comply with the measures and that smuggling of the oil could eventually rise. "If an available crude trades at a discount to Brent crude with a difference of $3-4 a barrel, we can overcome the freight cost, making the crude an attractive option", according to an official from an oil marketing company.

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