Crude Oil Eases From 4-year High

OPEC has been limiting its flow of oil for months but there are growing signs that could be coming to an end

But speaking to a Reuters reporter on Tuesday, one unnamed OPEC source said the group is considering lifting those limits sooner than anticipated, in part because of the rising price of oil. So, for the working week that ended on May 18, the country's oil reserves fell by 1.3 million barrels.

Brent for July delivery rose 23 cents to $79.80 on the ICE Futures Europe exchange and traded at a $7.96 premium to West Texas Intermediate.

Yet, while OPEC is mulling an increase the reality is it will be needed to replace the loss of Venezuelan crude oil and the loss of Iranian crude due to US sanctions.

OPEC Secretary-General Mohammad Barkindo said the idea of increasing output came following a critical tweet from the United States President Donald Trump, who said last month that OPEC had "artificially" boosted oil prices.

Gasoline futures were down 1.8% at $2.230 USA per gallon following the data release.

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The government, underlining its "pro-people commitment", said further legal action would be taken, "respecting" their feelings. The protestors claimed that that the plant would pollute groundwater in their area, and causing serious environmental hazards.

OPEC's third largest producer will be a key talking point when OPEC and 10 other oil producing countries meet in late June, after the U.S. chose to reimpose sanctions on Iran from November 5. Oil producers are debating an increase ranging from 300,000 barrels a day at the low end, backed by Gulf producers including Saudi Arabia, and a larger increase of about 800,000 barrels a day favored by Russian Federation, one person said. Longs slipped less than 0.1 percent, while shorts climbed 23 percent, the biggest jump since April. "The Democrats demanded Trump weigh in with OPEC to reverse crude price increases".

But with so much uncertainty over how sanctions might affect Iranian supply, fund managers have cut their holdings of crude futures and options by more than 10% in the last seven weeks to the lowest level this year. During the previous oil boom, USA shale producers borrowed large sums in order to ramp up production.

UBS said prices could keep rallying for several reasons, putting the US economy at risk of entering a recession.

Natixis, a London-based commodity research house, says: "Due to sanctions, Iran's 2.5-300,000 barrels a day of export will not happen, which Opec (the petro exporting nations' cartel) members are likely to replace".

Meanwhile, commercial USA crude inventories rose by 5.8 million barrels in the week to May 18, beating analyst expectations for a decrease of 1.6 million barrels, the Energy Information Administration (EIA) said on Wednesday.

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