Oil Inches Up on Supply Risks, Offset by Expected OPEC+ Output Increase

Summary

OPEC+ grouping meets Wednesday
Eight OPEC+ members expected to boost output on Saturday
Goldman Sachs sees OPEC+ keeping output steady after July hike
Canadian wildfires, Chevron’s Venezuelan oil curbs limit price downside

(Reuters) – Oil prices inched up on Wednesday, with the U.S. barring Chevron from exporting crude from Venezuela and production shut-ins from Canada, while markets eyed an expected production increase from OPEC+.

Brent crude futures rose 54 cents, or 0.8%, to $64.63 a barrel by 1050 GMT, while U.S. West Texas Intermediate crude gained 64 cents, or 0.9%, to stand at $61.45 a barrel.

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The Trump administration has issued a new authorisation for U.S.-major Chevron would let it keep assets in Venezuela but not export oil or expand activities, Reuters reported on Tuesday, citing sources.

Later on Wednesday, a full meeting is scheduled of the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+.

However, a July output hike could be decided on Saturday when eight members of the group hold talks, sources have said.

The coming demand for the summer driving season is significant, and with non-OPEC+ crude output flat in the first half of the year, coupled with risks of Canadian wildfires hurting supply, the call on crude is stronger from OPEC+, said Janiv Shah, vice president of oil commodity markets analysis at Rystad Energy.

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Goldman Sachs analysts see the group of eight keeping production steady after the July hike on new projects entering the market later this year, slowing economic growth and a build-up of oil stocks.

“However, we see the risks to our OPEC8+ supply path as skewed to the upside, especially if compliance doesn’t improve or if hard demand data surprise further to the upside,” they added.

Analysts added that prices could respond positively if there was progress on global trade talks or resolving U.S.-Iranian friction.

Iran’s nuclear chief Mohammad Eslami said on Wednesday it might allow the U.N. nuclear watchdog to send U.S. inspectors to visit nuclear sites if Tehran’s talks with Washington succeed.

Reporting by Seher Dareen in London, Colleen Howe in Beijing and Jeslyn Lerh in Singapore; Editing by Sophie Walker and Clarence Fernandez