Oil Prices Continue to Rise Amid Concerns on Global Supply

Oil prices continue to balloon on Tuesday trade amid concerns over the impact of possible sanctions of the United States on Valenzuela’s oil exports.

US West Texas Intermediate crude futures rose 0.28 percent or 20 cents at $72.44 per barrel and Brent crude futures were 0.16 percent or 13 cents higher at $79.35. Brent had crossed the $80 mark last week for the first time since November 2014.

US crude stockpiles are forecast to have decreased 2.8 million barrels last week, its third straight weekly fall. On the other hand, shale production of the US is forecast to hit a record-high in summer.

The US government imposed new sanctions after the re-election of Venezuelan president Nicolas Maduro. The vote was considered “sham” by the US and other global players.

Over the previous weeks, markets have been focused on the effect of US sanctions on Iranian exports and Washington’s exit from a nuclear deal with Tehran which the Trump administration repeatedly to do. The both supported the price increase.

Both Venezuela and Iran are members of the Organization of the Petroleum Exporting Countries (OPEC). An upswing in crude futures has largely been driven by OPEC-led production cuts and robust global demand.

“The solid global economy, selected supply disruptions and the upbeat market mood in particular in oil frame a positive environment,” said Norbert Ruecker, head of commodities and macro research at Julius Baer.

Low Oil Price Era is Dead

"I think the whole 'lower for longer' thesis is probably dead for a while," Oil Analyst Amrita Sen told CNBC's ‘Squawk Box Europe’ on Tuesday.

"We're looking at such a big potential disruption on the horizon… so the risk that you could lose such a big volume of crude oil exports from the market is what is keeping prices ticking higher," she added.

A drop in Venezuela’s oil output makes OPEC over-deliver compared to the agreement. Saudi Arabia and other producers of OPEC could in theory add more supply.

Stocks continue to decline, and the OPEC-led supply curbs have largely cleared an inventory surplus in industrialized countries based on the deal’s original goals.

RELATED: Oil Prices Hits $80 per Barrel, Highest Since September

HQBroker is here to give you a daily news roundup about the forex, commodities, technologies, automobiles, and economies. You can open an account now and make yourself updated with essential news in the market. Share your thoughts and experiences with us by commenting your HQBroker reviews.