Oil is above $ 71 as the focus on increasing supply threats returns

Oil prices rose above $ 71 a barrel yesterday, supported by a drop in exports from Venezuela and Iran, and a fight in Libya, raising concerns about rising supply threats, overshadowing the impact of expectations of rising inventories in the United States.
Brent crude <LCOc1> was up 19 cents at $ 71.37 a barrel, and the WTI rose 30 cents to $ 63.70 a barrel.

The downward pressure on the market was also fueled by expectations of an increase in US stockpiles and concerns about Russia’s readiness to stick to OPEC-led output cuts. On average, analysts expect US crude stocks to rise 1.9 million barrels last week, the fourth straight increase.

While OPEC-led supply cuts have pushed up more than 30 per cent this year, the gains have only gone beyond worries that slowing economic growth could weaken fuel demand.
So far, OPEC and its allies have been adamantly adhering to the plan to cut production despite price rebound, with strong parallel effects to tighten supply due to sanctions on Iran and Venezuela and geopolitical risks in Algeria and Libya.

“Prices are regaining their gains, with some global banks expecting to be record in the coming months, such as the Bank of America Merrill Lynch, which is a demand for refined materials that will push crude oil prices to record levels,” economists and oil analysts said.
The experts pointed out that there is a significant slowdown in the current phase in the production of US rock oil, which strengthens the situation of tightening the supply of oil and push for higher prices, but it must be realized that US production has the ability to add quickly to the supply as prices rise.

John Hall, director of Alpha Energy International, said prices are on track to capture record gains despite some of the current volatility. But if several factors could lead to a price slide, And its allies to suspend or reduce the output reduction agreement, which would have a quick effect on the rise in prices.
He explained that the second factor is the possibility of a decision by the US administration to extend concessions and expand exemptions from sanctions for the eight countries buying Iranian oil, which is scheduled for next month, and the third factor is the launch of the withdrawal of strategic oil reserves in the United States, pointing out that the three factors are excluded So far, but remain as prospects in the coming period.

For his part, said Mofeed Mandra, vice president of the Austrian energy company “LF”, that the capitalist discipline committed by the US oil-producing companies led to a state of relative slowdown in supplies, noting that the return of the prosperity of US production is linked to the need for industry to higher prices for contracts Futures to stimulate new drilling operations.
He pointed out that the response of US rock oil prices may be faster than the rest of the traditional producers, as the effects of rising prices in the traditional oil supply may appear next year, stressing that the demand for fuel and refined materials this year will be strong, according to estimates of international banks, Of the price gains affecting oil.

“The sharp falls in the production of Venezuela and Iran have created a crisis in the global supply of heavy oil,” said David Disma, an analyst at Southcourt Energy Consultancy. “Consumers are looking for alternatives to these two products, especially under the insistence of OPEC, To stick to the reduction of production, which plays an influential role in the heavy oil supply in particular. ”

He pointed out that Brazilian production may be the biggest beneficiary of the sanctions on Venezuela, and is seeking to strengthen its supply, especially to the Chinese market, which is the largest demand giant in the crude oil market in addition to the demand coming from US refineries seeking to develop other alternatives, Canada and Guyana.
Gulmeira Raziva, senior analyst at the Strategic Energy Center of Azerbaijan, confirmed the expected increases in oil supplies from non-OPEC countries this year. OPEC is therefore working to maintain market balance by adhering to production cuts to achieve a balanced and sustainable relationship. Between supply and demand. She said that the expectations of both OPEC and the International Energy Agency indicate large increases in both the US and Brazilian production,The next meeting of producers in Vienna will be able to develop a more effective strategy for production and supply in the coming period, in light of current and successive challenges and changes taking into account production levels, expected growth rate and demand indicators, as well as impacts and repercussions. Factors and geopolitical risks in the market.
The OPEC basket of crude prices fell to $ 70.21 a barrel yesterday, compared to $ 70.44 a barrel the previous day.

The daily report of the Organization of Petroleum Exporting Countries (OPEC) said yesterday, “The basket price, which includes the average prices of 14 tons of production of the member countries of the Organization achieved the first decline after several previous rises, and the basket price earned about one dollar compared to the same day last week , Which recorded 69.02 dollars a barrel. “