Global oil prices dropped after industry group the American Petroleum Institute (API) reported an increase in the US crude inventories last week.
However, the oil market remained tensed due to ongoing turmoil in Venezuela, a prominent petroleum producer.
Brent crude oil futures slipped 32 cents to $71.74 a barrel, while US crude futures were down 49 cents to settle at $63.42 per barrel, Reuters reported. API said that US crude inventories jumped by 6.8 million barrels to 466.4 million barrels in the week to 26 April.
PVM Oil Associates strategist Stephen Brennock was quoted by Reuters as saying: “US oil stocks are swelling due to an upswing in crude inventories […] the glut alarm bells are ringing louder in the US.”
The global oil market remains tensed over ongoing political crisis in Venezuela. Further increase in violence in the country may disturb crude supplies to the market, observers noted.
Crude supplies have already tightened due to ongoing supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and US sanctions on Venezuela and Iran.
Earlier, the US withdrew sanction exemptions granted to select countries on Iranian oil imports in order to eliminate crude exports from the country. It also demanded OPEC to raise its output to make up for the shortfall. However, Saudi Arabia said that there is no immediate plan to ramp up production.
Since 2018, US oil output has increased by nearly two million barrels per day (Mbpd) to around 12.2 Mbpd.