Oil gains on OPEC report; U.S. crude discount to Brent deepens
Oil prices rose on Monday as OPEC reported that the global oil glut has been virtually eliminated, while U.S. crude’s discount to global benchmark Brent widened to more than $7, its deepest in five months, APA reports quoting Reuters.
Global benchmark Brent was up $1.05 at $78.17 a barrel by 2:05 p.m. EDT and U.S. crude rose 19 cents to $71.17.
The report from the Organization of the Petroleum Exporting Countries “was bullish. That absolute plunge in Venezuelan production ... just highlights how tenuous the market is in terms of the supply and demand balance,” said John Kilduff, a partner at Again Capital LLC.
The OPEC report, published Monday, showed Venezuelan production at its lowest in decades and said the global oil glut had been virtually eliminated. Even so, OPEC and other producing countries were still trimming output more than their supply-cutting pact required.
U.S. crude’s discount to Brent was more than $7, the widest since mid-December.
“You have the threat that a high enough price will start to activate the 7,700 drilled but uncompleted wells in the lower 48 states,” said Walter Zimmerman, chief technical analyst at ICAP TA.
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