OIL: Market Surplus Worries Exacerbated By Sanction Easing Prospects

Oil prices fell over 2% on Tuesday on the prospect of an easing of oil sanctions that would allow Russia and Venezuela to export more crude adding to the glut already forecasted. However, ongoing protests in Iran could disrupt its production if they gather pace but the regime is determined to end them. The excess supply outlook drove prices lower through 2025 and developments that appear to increase output add further downward pressure. 

• WTI fell 2.3% to $56.99/bbl off the low of $56.84. It reached $58.87 before trending lower, breaching the 50-day EMA at $58.46. Initial support is at $54.89 with moving average studies in a bear mode.
• Brent is down 1.9% to $60.59 after falling to $60.40. It rose to $62.33 earlier, breaking above the 50-day EMA at $62.05. Technicals are signalling a downtrend with initial support at $58.53.
• President Trump said that US oil companies will rebuild Venezuela’s oil infrastructure within 18 months but others are talking years. Reuters reported that CEOs will visit the White House possibly on Thursday. Trump said that increased drilling in Venezuela will “bring down oil prices further” signalling that lower prices is the aim.
• As a former oil minister, interim president Rodriguez is seen as supportive of the oil sector and has been the point of contact for companies in the sector for some time. The WSJ said that the CIA recommended that someone from the regime replace Maduro.
• Chevron said that its operations in Venezuela are uninterrupted and Bloomberg is reporting that it has sent 11 tankers as the shadow fleet has gone.
• The details on security guarantees for Ukraine, which are required for a peace agreement, were discussed further in Paris on Tuesday.