Oil rises as Venezuela exports plunge

london - Surging US production keeps gains in check

Oil rose on Thursday on concerns about a plunge in exports from Venezuela, although surging US production kept gains in check.

Brent crude futures were up 23 cents at $75.59 a barrel by 0900 GMT, while US West Texas Intermediate (WTI) crude was 14 cents higher at $64.87 a barrel.

Venezuela, which faces the threat of US sanctions and is in the midst of an economic crisis, is nearly a month behind delivering crude to customers from its main oil export terminals, according to shipping data, and chronic delays and production declines could breach state-run PDVSA's supply contracts if backlogs are not cleared soon.

Tankers waiting to load more than 24 million barrels of crude, almost as much as state producer PDVSA shipped in April, are sitting off the Opec member's main oil port, according to shipping data.

"Troubles over supply from Venezuela come at a time when Opec is considering easing supply cuts which have been in place since 2017 and were implemented to support the price," London Capital Group head of research Jasper Lawler said.

"The big question for oil is whether or not Opec decides to ease the production cuts, with the meeting still some two weeks away, oil traders could be in for an increased bout of volatility."

Outside Opec, however, crude output continues to rise, especially in the United States, which is fast closing in on Russia's position as the world's largest producer, as supply approaches 11 million bpd.

US crude inventories rose by 2.1 million barrels in the week to June 1, to 436.6 million barrels, the Energy Information Administration said on Wednesday.

Surging US production has pushed the discount of WTI futures to Brent to more than $10 a barrel. - Reuters