$100 Oil-Price Spike Would Trigger Recession in Crude Reality

$100 Oil-Price Spike Would Trigger Recession in Crude Reality

US crude oil stockpiles climbed unexpectedly last week as net imports jumped, while gasoline stocks also posted a surprise build, the Energy Information Administration said on Wednesday.

USA crude settled down 0.5% at $71.84 a barrel after falling by more than 1% earlier.

The U.S. oil rig count rose by 15 to 859 in the week to May 25, the highest level since March 2015, General Electric Co's Baker Hughes energy services firm said.

OPEC could raise its oil production at its June meeting over supply worries from Iran and Venezuela, sources told Reuters Wednesday.

Oil later recovered some of its losses yesterday, to about $79.41...

Oil rose to around $80 a barrel today, supported by concern that falling Venezuelan crude output and a potential drop in Iranian exports could further tighten global supply.

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As supply disruption concerns due to an increasingly tight oil market causes crude oil to flirt with the $80-a-barrel mark, Gulf OPEC countries are said to be leading initial talks on when producers in the OPEC+ pact can start easing production curbs.

Venezuela's output has fallen amid an economic crisis, while Iran's supply is threatened by USA sanctions. Overall demand for refined products in the United States has kept refining activity buoyant, helping drain crude inventories in the world's largest consuming nation. The latter is somewhat surprising, Flynn said, because Brent crude is trading at more than a $7 premium to us crude WTCLc1-LCOc1 , making exports more attractive. It is set to enter into effect on January 1, 2020, and according to analysts, this can be another major driver for oil prices over the next two years as the energy and shipping industries are not quite ready for the incoming change.

Earlier this month, an OPEC source familiar with the kingdom's oil thinking told Reuters that Saudi Arabia is monitoring the impact on oil supplies of the US withdrawal from the Iran nuclear deal and is ready to offset any shortage but it will not act alone to fill the gap. Crude oil futures as far as five years forward have been surging in price in recent weeks.

The market rally will be tested by inventory data from the American Petroleum Institute, which is published after trading closes Tuesday in the United States.

Trump in April complained that OPEC was artificially pushing the price of oil higher.

The notoriously fractious cartel has been uncharacteristically collaborative of late, as OPEC and Russian Federation had agreed to curb their collective output by about 1.8 million barrels per day until the end of 2018.