Published: Thu, June 14, 2018
Business | By Tara Barton

Iran, Venezuela oil output to dominate OPEC meet, energy watchdog says

"The world economy is feeling some pain from higher oil prices", the IEA commented in its latest market report, adding "Increasing trade tensions are the main risk to our oil demand forecast".

Jason Bordoff, a Columbia University professor and former energy adviser to President Barack Obama, said politicians always fret when gasoline prices rise before a big election. "Adjusted for inflation, these prices are not out of line with where we've seen oil prices for the last decade or two".

Brent crude was up 53 cents at $76.41 a barrel by 10:52 a.m. EDT (1552 GMT).

US crude stocks fell more than expected last week, while gasoline and distillate inventories dropped, the Energy Information Administration said on Wednesday. US estimated gasoline demand hit a record high of 9.88 million bpd in the week, the data said. "Put the exports of crude on top of that, and it's just a really bullish report".

OPEC will meet on June 22-23 to discuss the potential of reducing its output cuts now that the market is more in balance. "It seems like we need nearly every barrel of that to keep up with this refining demand".

Domestic production rose to 10.9 million barrels per day up from 10.8 million bpd in the week prior, EIA said.

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United States President Donald Trump on Wednesday accused the Organization of Petroleum Exporting Countries (Opec) of driving up oil prices, in a fresh swipe at the cartel's agreement to cap production. A gallon of regular gasoline is now $2.91, up 25 percent from the year-ago level.

However, OPEC's president, Suhail Al Mazrouei, said on Tuesday that the USA has not asked the group to increase oil production in the wake of political unrest in oil-rich Venezuela and US sanctions on Iran. Key producers, including Saudi Arabia and Russian Federation, have reaffirmed the deal since then. Moscow's pledge in the deal is to shave off 300,000 bpd from the October 2016 level, which was the country's highest monthly production in nearly 30 years-11.247 million bpd.

Under one scenario weighed by the IEA, output from Venezuela and Iran by the end of 2019 could be 1.5 million barrels per day lower than it is today.

Oil prices turned positive on Wednesday after a bigger-than-expected decline in US crude inventories along with surprise drawdowns in gasoline and distillates indicated strong demand in the world's top oil consumer.

Fund manager Pierre Andurand at Andurand Capital is bullish.

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