Oil rises to 3-week high on Mideast tensions Venezuela concerns

Shutterstock photo

* Geopolitical factors support prices

* Relentless rise in U.S. crude output caps gains

* Gasoline futures rise to highest since August 2017

* U.S. crude stocks fall in the week ended March 16 -API (Adds API data)

By Stephanie Kelly

NEW YORK, March 20 (Reuters) - Oil prices climbed to theirhighest level in three weeks on Tuesday as tension in the MiddleEast and the possibility of further falls in Venezuelan outputhelped offset the impact of growing U.S. crude production.

Brent crude LCOc1 futures for May delivery rose $1.37 to$67.42 a barrel, a 2.07 percent gain. The global benchmark roseto $67.88 during the session, its highest level since lateFebruary.

U.S. West Texas Intermediate (WTI) crude CLc1 futures forApril delivery rose $1.34 to settle at $63.40 a barrel, a 2.2percent gain. WTI traded between $62.08 and $63.81.

The more active May U.S. crude futures CLc2 rose $1.41 tosettle at $63.54 a barrel.

Prices extended gains in post-settlement trading after datafrom the American Petroleum Institute showed a surprise draw inU.S. crude inventories.

Stocks fell 2.7 million barrels in the week ended March 16to 425.3 million barrels, according to the API, compared withanalysts' expectations for an increase of 2.6 million barrels. urn:newsml:reuters.com:*:nZXN049800 Government inventory data is due on Wednesday at10:30 a.m. EDT (1430 GMT). EIA/S

Geopolitical risks were top of mind on Tuesday. Saudi Arabiacalled the 2015 nuclear deal between Iran and world powers a"flawed agreement" on Monday, on the eve of a meeting betweenCrown Prince Mohammed bin Salman and U.S. President DonaldTrump. urn:newsml:reuters.com:*:nL8N1R15KJurn:newsml:reuters.com:*:nL1N1R214P

Trump has threatened to withdraw the United States from theaccord between Tehran and six world powers, raising the prospectof new sanctions that could hurt Iran's oil industry.

"There's an expectation that (Trump and Prince Mohammed) aregoing to take a harder line on Iran, and that's bringing pricesup," said Phil Flynn, a senior energy analyst at Price FuturesGroup in Chicago.

Worries about falling production in Venezuela, whose outputhas been halved since 2005 to below 2 million barrels per day(bpd) PRODN-VE due to the country's economic crisis, alsosupported oil markets.

The International Energy Agency said last week Venezuela was"vulnerable to an accelerated decline" and that the LatinAmerican country could trigger a renewed drawdown in stocks. urn:newsml:reuters.com:*:nL8N1QX2E8urn:newsml:reuters.com:*:nL1N1QX0YM

However, increased output in the United States, Canada andBrazil has capped oil price gains. U.S. crude oil production C-OUT-T-EIA has risen more than a fifth since mid-2016, to10.38 million bpd.

The ramped-up production threatens to undermine cuts made bythe Organization of the Petroleum Exporting Countries in aneffort to draw down a global supply glut.

Appetite for U.S. crude is adding to the headache facingOPEC. A widening discount of WTI to Brent crude makes it moreattractive for foreign refiners to process U.S. oil. Brent isthe benchmark for several Middle East and other global crudes.

The premium of Brent crude to WTI WTCLc1-LCOc1 rose above$4 a barrel on Tuesday.

Gasoline futures on the New York Mercantile ExchangeRBc1 rose 2.1 percent on Tuesday to settle at $1.9659 a gallon, thehighest level since August 2017.

Data from market intelligence firm Genscape showed gasolineinventories in the New York Harbor region fell by about 1.1million barrels last week, traders who saw the data said.

Heating oil futures HOc1 rose 2.2 percent to finish at$1.9495 a gallon, their highest settle since late February.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: Russia vs Saudi vs U.S. oil production   http://reut.rs/2G7AK80
GRAPHIC: World oil supply and demand balance   http://reut.rs/2FIxGvP
GRAPHIC: U.S. vs Venezuela oil production since 2005   http://reut.rs/2FWXdBH
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Additional reporting by Amanda Cooper in London and HenningGloystein in SingaporeEditing by Marguerita Choy and Leslie Adler) ((Stephanie.Kelly@thomsonreuters.com; 646-223-4471; ReutersMessaging: stephanie.kelly.thomsonreuters.com@reuters.net))

Let's block ads!(Why?)

Read Again Oil rises to 3-week high on Mideast tensions, Venezuela concerns : http://ift.tt/2u6UP9N

Let's block ads! (Why?)