NEW YORK (Reuters) – Oil prices fell on Friday, but Brent crude was on track for a sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming U.S. sanctions on Iran. U.S. West Texas Intermediate (WTI) crude futures for June delivery dropped 21 cents to $71.28 a barrel, a 0.3 percent loss. The contract was on track for a third straight week of gains.
Brent futures for July delivery fell 26 cents, 0.3 percent, to $79.04 a barrel, by 1:08 p.m. EDT (1708 GMT). The global benchmark on Thursday broke through $80 for the first time since November 2014, and investors anticipate more gains due to supply concerns, at least in the short-term. Brent has gained about 20 percent since the start of the year.
“Oil prices are in overbought territory, which has prompted some profit taking in today’s trading session ahead of the weekend,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
Traders were looking ahead to Venezuela’s election on Sunday, which could then trigger additional U.S. sanctions if President Nicolas Maduro is re-elected for a six-year term, though the opposition party has largely boycotted and two of his most popular opponents have been banned from running.
The process has been has been criticized by the United States, the European Union and major Latin America countries.
Further sanctions could hurt Venezuelan oil supply further, already reeling from lack of maintenance and state-run PDVSA’s inability to pay its bills. Most recently, the company elected to close its refinery in Curacao after ConocoPhillips has seized oil as it seeks to collect on a $2 billion court award.
Barclays said output from Venezuela could fall below 1 million barrels per day. The country produced around 1.4 million bpd in April, according to OPEC secondary sources.
OPEC leading producer 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.
Crude prices have received broad support from voluntary supply cuts led by the Organization of the Petroleum Exporting Countries. Oil has also been buoyed by this month’s announcement by the United States that it would withdraw from the 2015 Iran nuclear arms treaty and renew sanctions against the OPEC member.
U.S. investment bank Jefferies said sanctions against Iran could remove more than 1 million bpd from the market.
The U.S. oil rig count held steady at 844 this week after rising for six weeks in a row, General Electric Co’s (GE.N) Baker Hughes energy services firm said.
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.
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