Crude Oil Recovers Early Losses

Iranian delegation are seen parked outside a building of the Diaoyutai state guesthouse as Iranian Foreign Minister Mohammad Javad Zarif meets Chinese State Councillor and Foreign Minister Wang Yi in Beijing China

This was followed by CNBC and Oil Price Information Service's (OPIS) Tom Kloza calling for the same. In Iran, Reuters is reporting that Iraq "already pressured by the USA withdrawal from the nuclear deal, Iran faces a major test in managing Shi'ite cleric Moqtada al-Sadr, a formidable opponent who beat Tehran's longtime allies to achieve a shock victory in Iraq's parliamentary election".

Crude oil prices are now slightly higher - both Brent and WTI are up today.

Economic crisis has driven Venezuelan production to its lowest in years, while natural decline in Mexico cut production by 175,000 bpd in April, down 8 per cent year-on-year, the largest fall for any non-Opec producer.

ConocoPhillips continues aggressive action to obtain control of PDVSA's assets after an global arbitration court awarded it $2 billion in awards.

"In these early days, there is understandable uncertainty about its potential impact on Iran's oil exports, which are now about 2.4 mb/d", the IEA noted. The cargoes are holding 500,000 barrels of oil and 300,000 bpd of jet fuel, gasoline and diesel.

The price spread between US benchmark WTI and Brent has widened to more than $7 a barrel.

As a result of its surging production, USA crude is increasingly appearing on global markets.

OPEC production cuts and the potential of wide-reaching U.S. sanctions on Iran did little to prevent oil prices dipping further on Wednesday.

Physical crude markets are sagging under the weight of unsold barrels of oil, while the 50% jump in price of crude in the past year is encouraging major companies such as ExxonMobil, Royal Dutch Shell and Chevron, to raise production.

Crude inventories fell by 1.4 million barrels (MMBbl) in the week ended May 11, compared with analysts' expectations for a decrease of 763,000 Bbls. More and more market watchers see further upside for prices.

Still, the group may not be ready to take their foot off of the accelerator. The company has a few options if they leave.

The producers' original goal was to reduce oil inventories to the five-year average.

There are several ways to play higher oils prices.

China's oil demand growth has so far this year exceeded expectations, and Goldman Sachs, for example, says that growth could be even "higher than now estimated". Some other reports back up this notion. The commodity was helped by U.S. data which showed that the drop in crude inventories was smaller than expected.

With sanctions being given up to 180-day "grace periods", oil traders have most of what's left of 2018 to fret about the potential negative impacts of restricted trade for Iran. "Demand for oil has been revised downwards for the second half of the year from April", PVM Oil Associates strategist Tamas Varga told Reuters.

China is crucial to global oil demand growth, and if it keeps its current growth pace, it would support the strong demand growth that analysts expect.

At the same time, China's domestic crude oil production has been languishing near June 2011 lows in the first quarter this year, prompting higher imports to meet growing demand.

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