Oil prices drop marginally

Brent oil prices were little changed on Friday but were on track for a sixth straight week of gains, boosted by strong demand, looming U.S. sanctions on Iran and plummeting Venezuelan production. Brent crude futures for July delivery fell 6 cents to $79.24 a barrel, a 0.1 percent loss. The benchmark on Thursday broke through $80 for the first time since November 2014. U.S. West Texas Intermediate crude futures for June delivery fell 19 cents to $71.30 a barrel, a 0.3 per cent loss. The contract was still set for its third straight week of gains.

“Today is a bit of a pause and a retrenchment heading into the weekend with speculators trying to decide how close are we to the seasonal shift and do I take profits here,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.

British bank Barclays said it expected average prices of $70 per barrel for Brent this year and $65 a barrel for 2019, up from estimates of $63 and $60 previously. “Since last month, Venezuela’s production decline, (U.S. President Donald) Trump’s Iran sanctions decision, a new disruption in Nigeria, and anecdotal evidence from a new round of producer earnings require a price forecast revision,” the bank said. Rising prices have already raised the alarm among big oil-consuming countries.

OPEC kingpin Saudi Arabia said on Thursday it would make sure the world is adequately supplied with oil just as major consumer India expressed frustration with rising prices. Saudi Energy Minister Khalid al-Falih called India’s Petroleum Minister Dharmendra Pradhan to assure him that supporting global economic growth was “one of the kingdom’s key goals,” the Saudi Energy Ministry said. However, it will take time to assess whether oil prices remain volatile or not, Russia’s energy minister, Alexander Novak, said.

Crude prices have received broad support from voluntary supply cuts led by the Organisation of the Petroleum Exporting Countries. Beyond OPEC’s cuts, strong demand, falling output from Venezuela and the U.S. announcement this month that it would renew sanctions against OPEC member Iran have helped push up Brent by 20 percent since the start of the year. U.S. investment bank Jefferies said sanctions against Iran could remove more than 1 million barrels per day (bpd) from the market.

Barclays said output from Venezuela could fall below 1 million bpd. The country, also an OPEC member, produced around 1.5 million bpd in April. In the United States, crude production has continued to grow to record highs, rising 20,000 bpd to 10.72 million bpd last week, the Energy Information Administration said. The United States in February produced 10.3 million bpd, a record. Market participants awaited U.S. rig count data that was due later on Friday. BP Plc, however, expects the rally to cool off. The oil major’s chief executive, Bob Dudley, told Reuters he saw the price of oil falling to between $50 and $65 a barrel due to surging shale output and OPEC’s capacity to boost production.