Today, oil prices increased by 1 percent, as fighting in Libya and the declining exports from Venezuela and Iran raised concerns over the tightening global supply, however, uncertainty surrounding an OPEC-led production cut limited its gains.
Brent crude futures increased by 54 cents, or 0.8 percent, to settle at $71.72 per barrel. On the other hand, U.S. West Texas Intermediate (WTI) crude futures gained 65 cents, or 1 percent, to settle at $64.05 per barrel.
The prices extended gains in post-settlement trade following the release of data from the American Petroleum Institute, an industry group, that revealed that U.S. crude inventories unexpectedly dropped last week, falling by 3.1 million barrels, as compared to the expectations of analysts of a 1.7 million-barrel build.
The API said that gasoline stockpiles dropped by 3.6 million barrels, more than the forecasts of a 2.1 million-barrel drop.
Data from the U.S. government is set to be released on Wednesday.
In Libya, the fighting between Khalifa Haftar’s Libyan National Army and the internationally recognized government has increased the possibility of lower supplies from the OPEC member.
The sanctions that were imposed by the United States of America on two other members, Venezuela and Iran, are already cutting shipments. tanker data showed and industry sources disclosed that the crude oil exports of Iran have dropped this month to their lowest daily level in 2019.
An analyst at Price Futures Group in Chicago, Phil Flynn, stated: “Global supply is falling faster than people think. The market is imbalanced.”
He added: “The continuing loss of Venezuelan oil is going to take its toll. The OPEC cuts are going to take their toll.”
However, adding downward pressure, were concerns regarding the willingness of Russia to stick with OPEC-led supply cuts and expectations of higher inventories from the United States.
This year, oil prices have gained more than 30 percent. It was helped by the deal between the Organization of the Petroleum Exporting Countries and other producers including Russia. The group has been reducing output since January 1 and in June, it will decide whether to continue the said arrangement.
Today an official of the oil arm of Russian gas giant Gazprom, Gazprom Neft, is expecting that the global oil deal between OPEC and its allies to end in the first half of the year.