Oil price weakens but still near 3-year high

Oil price weakens but still near 3-year high

The decision of whether to restore the sanctions on Iran that were lifted after an agreement over its disputed nuclear program will be made by US President Donald Trump on May 12.

The rise in oil prices means further accretion to the nation's Excess Crude Account, into which the difference between the market price of oil and the budget benchmark is saved to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure.

French President Emmanuel Macron's prediction that the United States will pull out of the nuclear deal has boosted speculation over reduced shipments from Iran. Still, expanding American drilling activity continues to limit price increases.

West Texas Intermediate crude for June delivery fell by 9 cents to $68.01/bbl at 10:26 a.m. on the New York Mercantile Exchange.

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"Although the overall USA oil rig count rose by five, the prolific Permian region saw oil rigs decline by one", Anthony Headrick, energy market analyst and commodities futures broker at CHS Hedging LLC, said in an email.

Worldwide oil benchmark, Brent crude, on Monday hit $75 per barrel and rose further amid growing geopolitical tensions in the world.

Brent has risen by around 6.5 percent this month.

Brent crude, the global benchmark traded in London, closed at a level not see since late 2014.

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"It's only Trump who wants to back out of the deal, but he wants to back out of so many deals ..."

According to General Electric's Baker Hughes energy services firm, US drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest level since March 2015. Prices climbed as high as $75.47 last week, levels not seen since November, 2014. The rig fleet has expanded throughout the entire month of April, adding a total 28.

In a research note, the financial technology and analytics firm claimed that short interest in the U.S./Canadian oil and gas and consumable fuel sector has increased by 27% to $54.9 billion since WTI crude recovered from its year-to-date low of $58.98 in mid-February to reach $67.75.

Traders are unwilling to sign contracts for Iranian crude and refined products that would be valid after May 12, the deadline for Trump to decide whether to reimpose sanctions, according to recent interviews with six companies that buy and sell oil in the Middle East.

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Saudi Aramco, the world's biggest crude exporter, appointed new board members with experience in global oil and petrochemical businesses as it plans a possible overseas share sale in what could be a record initial public offering.

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