Brent slips amid lingering supply glut concerns
The front-month ICE Brent contract has dropped by $0.68/bbl on the day from Friday, to trade at $60.04/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
Brent’s price has gained upward support following a major geopolitical escalation in Venezuela.
Over the weekend, US troops carried out an operation that resulted in the detention of Venezuelan President Nicolas Maduro and his wife, from the country’s capital Caracas.
Moreover, US President Donald Trump said Washington would take control of the OPEC member nation and confirmed that the US embargo on Venezuelan oil would remain in place.
Venezuela controls almost 17% of global oil reserves, or 303 billion bbls, according to Reuters. The future of its oil output now depends on how US sanctions policy develops, market analysts said.
“Any rehabilitation of Venezuela’s oil sector could take years and billions of dollars in capital,” SPI Asset Management managing partner Stephen Innes said.
Downward pressure:
The total number of rigs drilling for crude oil in the US rose by three to 412 units last week, according to Baker Hughes.
The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.
In an oversupplied market, any signal of increased future supply can put downward pressure on Brent’s price.
By Aparupa Mazumder
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