Oil prices dip after US crude stocks rise

London, Reuters: Oil prices inched down on Wednesday after an unexpected rise in US crude inventories, but the fall was limited by an intensifying crisis in Venezuela along with tightened US sanctions on Iran. 

Brent crude oil futures were down at $71.82 per barrel at 1300 GMT, down 24 cents from their last close and erasing gains from earlier in the session. 

US crude futures were down 50 cents at $63.41 per barrel.  

Trading was thin as May 1 is a holiday in many markets. 

US crude stocks rose by 6.8 million barrels to 466.4 million barrels in the week to April 26, the American Petroleum Institute (API), an industry group, said on Tuesday. 

The figure far outstripped analysts’ expectations of an increase of just 1.5 million barrels. US government data on crude stocks is due at 1430 GMT. 

Markets also keenly watched Venezuela, where opposition leader Juan Guaido called for an uprising against President Nicolas Maduro. Many observers fear this could lead to escalating violence and further disruptions to crude supply. The unrest adds to a range of fluid geopolitical factors which have been affecting oil prices in recent months. 

“Prices have lacked direction during the European session amid thin trading volumes owing to Labour Day. Nevertheless, all eyes will be on ... Venezuela during the US session, which will also be supportive of prices,” said Abhishek Kumar, head of analytics at Interfax Energy in London. “Market participants will also closely watch the weekly oil inventories report from the US later in the session.” 

Oil markets have already tightened this year due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) as well as the sanctions on Caracas and Tehran. 

Washington is set to revoke waivers for select countries to import Iranian oil on Wednesday and says it aims to drive down Iran’s crude exports to zero, but it remains unclear whether Iran’s top oil customer China will comply. 

OPEC meets in June to discuss production policy. While Washington has demanded the group increase output to make up for the shortfall from Iran, OPEC’s de facto leader Saudi Arabia said on Tuesday it had no immediate plan to do so. 

“Recent comments from (Saudi Energy Minister Khalid) al-Falih confirm our view that the kingdom will respond cautiously with other oil producers and not pre-emptively ramp up production,” said Giovanni Staunovo, analyst at UBS in Zurich.