Brent crude prices rise 1% amid Venezuela oil export concerns

Brent crude futures rose more than 1 percent on Wednesday after Venezuela raised the prospect of halting some crude oil exports, according to people familiar with the matter, but gains were capped amid reports the U.S. government had asked Saudi Arabia and some other OPEC producers to increase output.

Falling production from Venezuela has contributed to a rally in global oil price Brent to nearly $80 a barrel. State firm PDVSA is considering declaring force majeure on some exports, three sources told Reuters, amid plummeting output from its oil fields and tanker bottlenecks at ports.

Brent crude rose 78 cents to $76.16 a barrel by 0645 GMT after dropping to its lowest since May 8 on Tuesday. U.S. West Texas Intermediate (WTI) crude futures were up 33 cents at $65.85 a barrel, having touched a near two-month low on Tuesday.

"It`s a tug of war between the loss of supply from Venezuela and Iran and the potential output increase from OPEC and U.S. shale," said Tony Nunan, a risk manager at Mitsubishi Corp. "$80 is a temporary ceiling for oil until we hear from OPEC." 

The Organization of the Petroleum Exporting Countries and Russia will meet on June 22-23 to decide how much production they will increase as global inventories have tightened while Venezuela`s production has dropped more than expected. U.S. sanctions on Iran are also threatening to reduce oil exports from the OPEC producer.

The United States government has weighed in on the decision by putting in unofficial requests to Saudi Arabia and some other OPEC producers to increase output, sources said on Tuesday.

"At the moment, the oil price is being driven by OPEC and views on how much and how quickly OPEC plus will raise output," Energy Aspects analyst Virendra Chauhan said.

WATCH ZEE BUSINESS VIDEO HERE

Reuters reported on May 25 that the producers were considering a supply increase of 1 million barrels per day, with a final decision to be made at the June meeting in Vienna. 

WTI`s discount to Brent widened 42 cents to $10.34 a barrel as the global benchmark rose more than U.S. crude futures.

American Petroleum Institute data showed late on Tuesday that U.S. crude inventories fell by 2 million barrels, compared with analyst expectations for a decrease of 1.8 million barrels. 

Investors are waiting for the official inventories report to be issued by the U.S. Energy Department`s Energy Information Administration at 1430 GMT.