Economy

Oil prices reverse their rise, and drivers may see relief

Oil prices reverse their rise, and drivers may see relief

Oil prices recorded their largest one-day drop in two weeks on Thursday, with expectations building that OPEC could wind down an output deal that has been in place since the start of 2017 due to concerns about supplies from Venezuela and Iran.

Oil prices fell more than $2 per barrel on Friday as Saudi Arabia and Russian Federation discussed easing production cuts that have helped push crude prices to their highest since 2014.Brent crude futures fell $2.35, or 3 percent, to settle at $76.44 a barrel.

West Texas Intermediate fell $2.83, or 4%, Friday to $67.88.

The Organization of the Petroleum Exporting Countries may decide in June to lift output to make up for reduced supply from crisis-hit Venezuela and Iran, which was stung by the US decision to withdraw from the nuclear arms control deal, OPEC and oil industry sources told Reuters.

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Russia's energy minister said oil ministers from OPEC states and non-OPEC countries participating in a deal to cut output would likely decide to gradually ease curbs at their meeting in Vienna next month.

On the economic data front, USA durable goods orders fell 1.7% in April but the weaker reading was largely offset by a better-than-expected growth in orders minus transportation, which rose 0.9% to mark the third straight month of gains.

Under current conditions of improving fundamentals of supply and demand, met with a decline in OPEC production and a potential USA embargo, oil prices experienced a 75 percent rise since last summer's rate.

Supply concerns have pushed crude to multi-year highs, with Brent last week breaking above $80 a barrel for the first time since November 2014.

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Pressure has been on the rise since the International Energy Agency published its monthly report acknowledging that the oil market was now balanced and that commercial glut in major industrial countries fell by about 1 million barrels. Global crude inventories have fallen over the past year because of the OPEC-led cuts, which were boosted by a dramatic drop in Venezuelan production.

"It just feels like reducing exposure in front of a long weekend", said Walter Zimmerman, chief technical analyst at ICAP-TA in Jersey City, New Jersey. Elsewhere, U.S. President Donald Trump cancelled a planned summit with North Korea, increasing tensions in the region.

Sources said this week that Saudi Arabia and Russian Federation were discussing raising OPEC and non-OPEC oil production to ease 17 months of strict supply curbs amid concerns that a price rally has gone too far.

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