Investing.com – WTI crude oil prices settled lower as investors appeared to take profits on the sharp rally this week but sentiment remained positive amid ongoing OPEC-led output cuts and the prospect of geopolitical tensions disrupting supplies.
Crude oil prices struggled to extend their recent rally after hitting a nearly seven-week high of $65.69 a barrel as investors took profits on WTI’s more than 3% rally so far this week which followed a surprise draw in U.S. crude stockpiles seen Wednesday and rising geopolitical tensions.
Inventories of U.S. crude fell by 2.622 million barrels for the week ended March 16, confounding expectations for a rise of 2.6 million barrels.
Morgan Stanley said it forecasts an “under-supplied market in 2018,” would make inventories even tighter, citing geopolitical tensions.
“On May 12, the US government will need to decide on the renewal of the waiver of Iranian sanctions, Morgan Stanley said.” “Depending on the outcome, this could affect Iranian exports, including possibly taking a few hundred thousand barrels per day off the market.”
The bank also cited the risk of a dip in Venezuelan output as an additional factor that could support oil prices.
“Any restrictions imposed by the US government on diluent exports from the US or crude imports from Venezuela into the US could lead to a further decline in overall production, the bank added”
The bank did, however, warn that a “common pushback” to its call for an under-supplied oil market was rising US shale.
U.S. output rose to a record 10.4 million barrels per day last week as domestic producers edged closer to matching Russia's output of 11 million barrels per day.
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