Oil prices dipped on Wednesday after a report indicated a rise in available U.S. crude inventories.
However, the market remained tense amid an intensifying political crisis in Venezuela, tightening U.S. sanctions on Iran and continuing OPEC supply cuts.
Spot Brent crude futures, the international benchmark for oil prices, were at $71.65 per barrel down 41 cents, or 0.6 per cent, from their last close.
U.S. Wesr Texas Intermediate (WTI) crude futures were down 51 cents, or 0.8 per cent, at $63.49 per barrel.
U.S. crude stocks rose by 6.8 million barrels to 466.4 million barrels in the week to April 26, industry group the American Petroleum Institute (API) said on Tuesday, implying a rise in U.S. crude supply.
“Crude prices are off .after the weekly API oil inventory report showed a build of 6.8 million barrels, up from the draw of 3.1 million barrels we saw last week,” said Edward Moya, senior market analyst at futures brokerage Oanada.
However, focus was shifting to the crisis in major oil producer Venezuela, where there appears to be a standoff between incumbent President Nicolas Maduro and opposition leader Juan Guaido. Many observers fear this could lead to large-scale violence, as well as disruptions to crude supply.
Crude markets have tightened this year due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and beefed up U.S. sanctions on Iran’s oil exports.
Washington re-imposed sanctions on Tehran in November last year, but initially allowed its major buyers to import limited crude volumes for another six months.
That period expires on Wednesday, and Washington has said it will not extend any sanction exemptions as it aims to drive down Iranian crude exports to zero.
Despite this, some analysts say global oil markets are amply supplied.
Stephen Innes, head of trading at SPI Asset Management, said OPEC “could quickly compensate the losses from Iran supplies with comparative ease.”
OPEC is due to meet in June to discuss its production policy, and while Washington has put pressure on the group to increase output to make up for the shortfall from Iran, OPEC’s de-facto leader Saudi Arabia said on Tuesday that it had not immediate plans to raise output.
“The game plan (for OPEC) could be about maintaining a price floor rather than overtly pushing prices higher,” Innes said.