U.S. West Texas Intermediate crude and internationally-favored Brent crude oil are trading sharply lower on Friday, putting the market in a position to finish the week lower for the first time since the week-ending April 27. The market is being pressured by the possibility of increased production from OPEC for the first time since 2016. This news is offsetting potentially bullish supply disruptions from both Venezuela and Iran.
Also worrying bullish crude oil traders was a sustained rise in gasoline inventories just ahead of the Memorial Day holiday in the United States, which typically marks the start of the summer driving season.
Crude oil sellers are reacting to the news that Russia hinted it may gradually increase output after withholding supplies since 2017 together with producer cartel OPEC.
Russia has been floating the idea of ending the production for several weeks, with energy minister Alexander Novak saying on Thursday that restrictions on oil production could be eased “softly” if OPEC and non-OPEC countries see the oil market balancing in June.
Surprise Build in U.S. Inventories
An unexpected build in U.S. crude oil inventories also weighed on prices, driving the spread between Brent crude and U.S. West Texas Intermediate (WTI) close to its widest in three years.
On Wednesday, the U.S. Energy Information Administration (EIA) said commercial crude inventories rose by 5.8 million barrels in the week…