Brent crude is trading above $ 78 per barrel

Brent crude is trading above $ 78 per barrel

Mitsubishi Corp's oil risk manager in Tokyo, Tony Nunan, projected that Iran sanctions could lower Iranian oil exports by 200,000 barrels-per-day by the fourth quarter (read: 3 Country ETFs May Suffer as Oil Springs Higher).

The price drop of both WTI and Brent crude oil this week is being attributed to sanctions on Iran and increased sanctions on Venezuela following last weekend's re-election of Nicolas Maduro.

But the sources said that the quick decline in global oil inventories and worries about the impact on oil supplies after the US decision to withdraw from the worldwide nuclear deal with Iran, as well as Venezuela's collapsing oil output, were behind the change in OPEC's thinking. But today I wanted to highlight technical factors rather than fundamentals as the chart of Brent looks quite interesting.

Distillate inventories decreased by a million barrels last week and remain in the lower half of the average range for this time of year.

OPEC may decide to raise oil output as soon as June as Venezuelan output collapses, US sanctions against Iran loom, and after Washington raised concerns that the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.

Fawad Razaqzada is market analyst at FOREX.com and City Index brands of Gain Capital.

The markets were supported early in the session by concerns over possible supply disruptions due to new sanctions against economically-crippled Venezuela and looming sanctions against Iran.

United States warns employees after Chinese embassy worker shows brain injury
The US official at the consulate in Guangzhou experienced a variety of "physical symptoms" between late 2017 and April this year. The department said it wasn't aware of any similar situations in China, either within the diplomatic community or among others.

Traders also drew attention to the data of the American Petroleum Institute (API) on reserves in the US. So, for the working week that ended on May 18, the country's oil reserves fell by 1.3 million barrels.

The Saudi comments sent oil prices tumbling by over three percent.

Oil prices have gained almost 20 percent this year, driven primarily by coordinated supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and partners including Russian Federation.

"However, now that we are getting closer to $100/bbl the net impact of higher oil prices is again becoming a net negative", UBS economists said in a research note.

For the first time in more than five years, Saudi Arabia and other oil producers are feeling the political pressure from consumer nations.

Oil prices have risen above a "sweet spot" between $50 and $70 a barrel that encourages global growth, CNBC.com cited UBS as saying. That was a surprise increase compared with the 2 million-barrel decline predicted in a Bloomberg survey.

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