Oil Futures Rebound on Bullish US Inventory Data

Oil prices have hit their highest levels since 2014 boosted by the latest troubles for Venezuelan oil company PDVSA and a looming decision on whether the United States will re-impose sanctions on Iran

Oil prices above $70 since 2014

Energy stocks also fell as oil prices declined ahead of an afternoon announcement by the White House on whether the USA will pull out of a landmark nuclear deal with Iran.

The oil and gas index.SXEP was the biggest sectoral gainer, up 1.5 percent at a three-year high as crude rallied after Trump's move on Iran raised the risk of conflict in the Middle East and cast uncertainty over global supplies.

US crude oil production for the week ending April 27-the most recent data available-increased to 10.619 million bpd, according to the EIA.

"Initial cargoes of West Karoun will be sold on a spot basis as the quality of the crude is yet to be established", one of the sources explained, while the other added that "some refiners have taken the sample". 'For investors seeking exposure to oil today, we see a stronger case for investing in energy equities over crude itself or energy-related debt, ' says Turnill.

Most analysts believe that at least some nations will ignore the new American sanctions and continue buying Iranian crude.

Oil fell 2.7 percent Tuesday after CNN reported the US would pull out of the Iran deal and allow sanctions to go forward, but that they could take months to go into effect.

"By declaring. the United States will be instituting the highest level of sanctions against Iran - adding that any country that aids Iran will also be sanctioned - President Trump is clearly articulating that he has minimal desire in an alternative agreement with Iran", Khoman said. And he believes that oil prices are heading much higher.

Prices have also gotten a lift from strong global demand and supply cuts by OPEC and Russian Federation. If we do nothing, we know exactly what will happen. Since restrictions were lifted in early 2016, Iran's oil production has fully recovered to 2011 levels of about 3.8 Mbd.

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The latest financial sanctions will affect Iran's basic ability to conduct trade and make it hard for other parties to the 2015 agreement - France, Britain, Germany, Russia and China - to keep the agreement alive, if they want continued unobstructed access to USA financial institutions.

Iran re-emerged as a major oil exporter in 2016 after worldwide sanctions against it were lifted in return for curbs on Iran's nuclear programme.

Certain exemptions and waivers can be negotiated, but the US did not say what products or countries might qualify. Pump prices are up 15 cents from a month ago and 46 cents from a year ago.

Since the Iran nuclear deal went into effect, its exports have risen to about 2.5 million bpd, from less than 1 million bpd. China, Iran's largest customer, may be especially reluctant to cut Iran off because of the trade tensions between Beijing and Washington.

Snapping sanctions back on Iran will have an immediate impact on less than 200,000 barrels per day of Iranian oil, according to analysts surveyed by S&P Global Platts.

For existing contracts, companies will have a "wind-down" period of three to six months.

"I don't think Saudi Arabia or OPEC will step in and contain prices at the moment", sid Hynes. USA energy companies added nine oil rigs looking for new production in the week to May 4, bringing the total count to 834, the highest level since March 2015, energy services firm Baker Hughes said last Friday.

"We expect WTI will average $68.5 per barrel this year, up from $50.9 per barrel in 2017", the analysts said.

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