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 sharply lower in early trade Thursday as traders continued to sell contracts in reaction to unexpected large builds in crude and gasoline inventories and because many think the Organization of the Petroleum Exporting Countries will ease ongoing supply cuts that would increase world oil supplies.
OPEC will decide whether to ease production limits that are slated to run through end year at its next member meeting in Vienna on June 22. OPEC crude production averaged 31.93 million bpd in April, down from 32.372 million bpd in 2017.
Pressure continues to mount on OPEC to step in and reduce supply cuts because of the re-imposition of Iranian sanctions, dwindling exports from Venezuela, Canada and Mexico, and stout economic activity in the United States and abroad is causing crude prices to trade at 3-1/2 year highs.
Increased shale oil production from the United States is offsetting losses elsewhere, but are not seen fully bridging the gulf amid takeaway capacity constraints that are bottling up supply in the Permian Basin of West Texas.
Near the 9:00 AM ET open, NYMEX July West Texas Intermediate futures were down $1.07 to $70.77 bbl, while the August contract, which became the second month out Tuesday was $1.08 lower at $70.63 bbl.
ICE July Brent was off $1.10 to $78.70 bbl, while August lost $1.08 to $78.76 bbl. NYMEX June RBOB futures slid about 2.3 cents to $2.2372 gallon, while the June ULSD contract was off 1.9 cents to $2.2705 gal.
Crude production in Venezuela is now the lowest in decades outside of a brief strike in 2002-03. OPEC data for April pegs Venezuelan output at 1.436 million bpd, down from 1.967 million bpd for April 2017.
Analysts expect the pace of decline of oil production from Venezuela to continue to accelerate, with analysts now projecting output to fall below 1.0 million bpd by year end.
Brian Whary can be reached at email@example.com
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