Oil Mixed on June WTI Buying

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were mixed in early trade Monday as traders filled open June positions ahead of Tuesday's June West Texas Intermediate futures contract expiration, while July crude contracts were mixed on a lack of fresh headlines from around the world.

Sunday's landslide election win by Nicolas Maduro in the much-disputed Venezuelan presidential elections is expected to change very little, analysts said, as crude production is expected to continue to decline. Last week, energy watchdog group the International Energy Agency highlighted a steep drop in Venezuela's crude production, with output at the lowest point in decades outside of production loss during the 2002-03 strike. Organization of the Petroleum Exporting Countries, citing secondary sources, reported Venezuela's crude production averaged 1.436 million bpd in April, down 531,000 bpd or 27% against year prior. Venezuela is a member of OPEC.

"Though we assume Venezuela's output will dip below 1 mbd, Iran's output may be more resilient," said Barclays in a research note Friday, also commenting on the response to the U.S. pullout of the Iranian nuclear accord and the reinstitution of sanctions.

"The Trump administration cannot employ sanctions as a foreign policy lever on Venezuela and Iran and avoid higher US gasoline prices. That means that US policy will have an even more outsized effect on oil prices in the months ahead," said Barclays.

No news statement was forthcoming Monday from The Trump Administration following Sunday's elections, especially given remarks made in February calling for a potential embargo of Venezuelan oil exports. The February statement follows an August 2017 statement raising the possibility of potential military actions by the United States, given continuing human rights abuses under Maduro's leadership.

Near 9:00 AM ET, NYMEX June WTI futures were up 32cts to $71.60 bbl, and the July contract, which becomes the prompt month at 6:00 PM ET Tuesday, was up 32 cents to $71.68 bbl. ICE July Brent was up 7 cents to $71.58, while NYMEX June RBOB futures was up fractionally to $2.2344 and the June ULSD contract was fractionally lower at $2.2635 gallon.

Last week, the International Energy Agency said there is "understandable uncertainty" about recent actions by U.S. President Donald Trump to pull out of the 2015 Iranian nuclear deal, and its potential impact on Iran's oil exports. IEA pegged current exports at 2.4 million bpd. IEA points to a "180-day period" for customers to adjust their purchasing strategies though it remains to be seen how waivers and other aspects of the sanctions will be implemented. In addition, other signatories to the JCPOA have said that they will continue with the agreement.

Brian Whary can be reached at brian.whary@dtn.com