U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are in a position to settle the week higher after hitting new highs for the year earlier in the week. However, Friday’s price action suggests investors are still waiting for a bullish catalyst to trigger another surge to the upside and finally break out of its trading range in a decisive manner.
Supply Issues Supportive
The OPEC-led production cuts which began on January 1 and the U.S. sanctions against Iran and Venezuela have been carrying crude oil prices higher for months, but gains have been limited by concerns over rising U.S. inventories and production. However, these worries were lifted on Wednesday, at least temporarily, with the release of a bullish EIA inventories report.
Wednesday’s weekly EIA report for the week-ending March 8 showed U.S. commercial crude oil inventories fell as refineries hiked output.
Crude inventories dropped by 3.9 million barrels in the last week, to 449.07 million barrels, compared with analyst expectations for an increase of 2.7 million barrels. U.S. crude oil production also dipped, falling by 100,000 barrels per day (bpd) to 12 million bpd.
Additionally, in Venezuela, oil production and exports continued to be disrupted by a political and economic crisis that has caused massive blackouts and supply shortages. According to reports, two storage tanks exploded at a heavy-crude upgrading project in eastern Venezuela on…