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Oil prices reached their highest level since November 2014 after a larger than expected decline in US crude inventories added to a rally fueled by a major supply outage in Canada, concerns over Libyan exports and the Trump administration's increased efforts to disrupt Iran's oil exports.
The hardline approach comes at a time when oil markets are finely balanced and crude prices are trading at levels close to the highest of several years.
It also occurred as a result of a supply outage at Syncrude in Canada, which immobilized 350,000 barrels per day (bpd) of crude, with repairs expected to last at least until July. Declining Canadian exports helped drain heavy crude oil supplies in North America and contributed to the US crude oil inventory draw, badysts said.
In Libya, a power struggle between the official government and the rebels has not revealed who will take care of the country's oil exports, even though the oil ports of Hariga and Zueitina in the north of the country are in danger. East Libya are functioning normally.
The Organization of the oil exporting countries decided Friday to increase oil production to prevent overheating of the market. The 14-member producer group took action as Venezuela's production declined, impending supply disruptions from Iran and lower production elsewhere raised concerns about rising oil prices for weaken global demand.
"I personally think that they underestimate the amount that they will increase production because they did not want to lower the price of oil," said Jim Iuorio, general manager of TJM Institutional Services , at CNBC's "Futures Now".
"Now, with this additional increase in oil for a totally separate title, I expect that they will increase production," he said, referring to the deadline for the administration. Trump for imports of crude oil from Iran.
The main exporter and leader of OPEC in Saudi Arabia plans to beat 11 million bpd in July, against 10.8 million bpd in June, told Reuters Tuesday a source close to Saudi plans.
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