The U.S announces a sanctions “lite” package on Venezuela fueling further rallies in crude, but deteriorating relations with Russia could have a larger downstream effect.
Crude oil benchmarks settled above US$ 50/bbl, amidst optimism over OPEC/non-OPEC meeting next week. Threat of US sanctions against Venezuela added to hopes of tightening supply. Gains were limited as a Reuters report showed that OPEC June production was revised higher by +0.2M bpd in June. The front-month WTI contract rose to 50.41, highest in 2 months, before ending the day at 50.178, up +0.93%.
OPEC/non-OPEC technical meeting will be held next month to discuss about the compliance issue. as the OPEC statement suggested, the meeting aims to "better understand the difficulties and obstacles faced by some OPEC and non-OPEC participating countries and to assess how conformity levels can be improved with the goal of achieving a faster rebalanced global oil market, for the benefit of producers and consumers alike".
Another news that boosted oil prices was US' sanction over Venezuela president Nicolas Maduro after an election over the weekend virtually gave the president unlimited power. As the US Treasury indicated, the sanctions freeze any assets Maduro may have in US jurisdictions and bar Americans from doing business with him
The effect of Nonfarm payroll on Friday cannot be over emphasized as oil prices will definitely react to actual figure release.
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