By Ayenat Mersie
NEW YORK (Reuters) - 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.
Global benchmark Brent
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
"And meanwhile, if Iranian crude is really taken off the water, it's going to impact Brent much more than it's going to impact WTI," Zimmerman said.
It is unclear how hard U.S. sanctions will hit Iran's oil industry. Much will depend on how other major oil consumers respond to Washington's action against Tehran, which will take effect in November.
"Germany has said it will protect its companies from U.S. sanctions, Iran has said French oil giant Total
Michael Wittner, analyst at Societe Generale, forecasts U.S. sanctions will remove 400,000 to 500,000 barrels per day of Iranian crude from the global market.
Also supportive to prices was data from market intelligence firm Genscape showing that inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell more than 400,000 barrels in the week to May 11, according to traders who saw the data.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)