U.S. West Texas Intermediate crude oil futures are trading higher early Friday, putting the market in a position to close higher for the week. While this chart pattern isn’t enough to change the main trend to up, it is a sign that the buying is greater than the selling at current price levels.
Crude oil prices have been supported this week by supply issues in Venezuela, where state-owned oil firm PDVSA is struggling to clear a backlog of around 24 million barrels of crude waiting to be shipped to customers.
The situation got so bad earlier in the week that the government threatened force majeure that would have effectively cancelled all future delivery contracts. This would have reduced supply in the open market and driven prices higher.
Despite the developing strength in the market, which is likely the result of aggressive short-covering, there are still the major issues of increasing U.S. production and the possibility of increased output from OPEC and other major non-OPEC producers.
OPEC and Russia are due to meet at the organization’s headquarters in Vienna on June 22 to discuss production policy.
Crude oil was also underpinned late Tuesday by the American Petroleum Institute’s weekly inventories report that showed a larger-than-expected drawdown.
However, prices dropped sharply from intraday highs on Wednesday after the U.S. Energy Information Administration reported another rise in U.S.…