Investing.com – WTI crude oil prices settled higher on Monday as geopolitical uncertainty rose after weekend elections in Venezuela viewed as illegitimate raised the prospect of US sanctions on the country’s exports.
On the New York Mercantile Exchange crude futures for July delivery rose 1.4% to settle at $72.24 a barrel, while on London's Intercontinental Exchange, Brent gained 1.06% to trade at $79.36 a barrel.
Venezuela’s Nicolas Maduro risked further pressure from the International community as his re-election win on Sunday, raised the prospect of US sanctions on the Venezuela, which would further batter the country’s beleaguered energy industry.
Ahead of U.S. sanctions on Iran, meanwhile, U.S. Secretary of State Mike Pompeo threatened even tougher sanctions against the Islamic Republic. Pompeo claimed the sanctions would be the “strongest in history when complete.”
The prospect for a disruption to global oil supplies is expected to increase the pace of rebalancing in the oil market, prompting analysts to raise their forecast for oil prices.
Citigroup raised its base-case oil-price forecast by $10 a barrel in 2018, up to $75 barrel annual average and said oil prices would continue to trend higher through 2018.
"Our expectation for balancing, from a market currently in deficit, has been pushed to the second quarter of 2019 from the third quarter of 2018 period we expected previously," Citigroup said.
The bank sees Venezuelan production likely falling below 1 million barrels per day before the end of the year. Output in Venezuela has dropped by a third in two years to its lowest in decades, according to Reuters.
Traders, continued, however, to take profits on the recent rally in oil prices as data showed they cut their bullish bets on crude oil for the fourth straight week.
CFTC COT data showed money managers reduced their net long positions in crude futures to 644,400 lots from 679,900 lots for the week ended May 16.