Brent Prices Anticipated to Rise Over Supply Concerns

Oil prices fell on Friday, but Brent crude marked its sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming US sanctions on Iran.

Brent crude futures fell 79 cents, or 1%, to settle at $78.51 a barrel, CNBC reported.

The global benchmark on Thursday broke through $80 a barrel for the first time since November 2014 and investors anticipate more gains due to supply concerns, at least in the short run.

Brent, which has gained about 17.5% since the start of the year, rose about 1.9% this week. West Texas Intermediate crude futures fell 21 cents to settle at $71.28 a barrel, a 0.29% loss. The contract rose about 0.9 % for the week, its third straight week of gains.

“Nothing has changed fundamentally today to really drive that small price movement down,” said Nick Holmes, an investment analyst on the energy portfolio team at Tortoise Capital in Leawood, Kansas, adding that some investors were taking profits ahead of the weekend.

Traders were looking ahead to Venezuela’s election on Sunday, which could then trigger additional US sanctions if President Nicolas Maduro is reelected 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 criticized by the United States, the European Union and major Latin America countries. Additional sanctions could further hurt Venezuelan oil supply, 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 seized oil as it seeks to collect 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 Petroleum Exporting Countries.