US crude dips 21 cents, settling at $71.28, but posts third straight weekly gain

Key Points
  • Brent crude is on track for a sixth straight week of gains after rising above $80 on Thursday, though it failed to hold above that level.
  • Traders were looking ahead to Venezuela's election on Sunday, which could then trigger additional U.S. sanctions.
  • Saudi Arabia makes assurances on oil supplies after India complains about rising prices.
Lucy Nicholson | Reuters

Oil prices slipped on Friday, as traders took profits following a rally on plummeting Venezuelan production, strong global demand and looming U.S. sanctions on Iran.

U.S. West Texas Intermediate crude futures ended Friday's session down 21 cents at $71.28 a barrel, but posted a third straight week of gains.

Brent crude futures were down 81 cents, or 1 percent, to $78.49 a barrel by 2:29 p.m. ET, set for a sixth straight week of gains.

The international benchmark broke through $80 for the first time since November 2014 on Thursday, but gave up nearly all of the day's gains in afternoon trading. Investors anticipate more gains due to supply concerns, at least in the short-term. Brent has gained about 17 percent since the start of the year.

"Oil prices are in overbought territory, which has prompted some profit taking in today's trading session ahead of the weekend," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

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Traders were looking ahead to Venezuela's election on Sunday, which could then trigger additional U.S. sanctions if President Nicolas Maduro is re-elected for a six-year term, though the opposition party has largely boycotted and two of his most popular opponents have been banned from running.

The process has been has been criticized by the United States, the European Union and major Latin America countries.

Further sanctions could hurt Venezuelan oil supply further, already reeling from lack of maintenance and state-run PDVSA's inability to pay its bills. Most recently, the company elected to close its refinery in Curacao after ConocoPhillips has seized oil as it seeks to collect on a $2 billion court award.

Barclays said output from Venezuela could fall below 1 million barrels per day. The country produced around 1.4 million bpd in April, according to OPEC secondary sources.

OPEC leading producer Saudi Arabia said on Thursday it would make sure the world is adequately supplied with oil just as major consumer India expressed frustration with rising prices.

$80 oil, friend or foe of the rally?

Saudi Energy Minister Khalid al-Falih called India's Petroleum Minister Dharmendra Pradhan to assure him that supporting global economic growth was "one of the kingdom's key goals," the Saudi Energy Ministry said.

Crude prices have received broad support from voluntary supply cuts led by the Organization of the Petroleum Exporting Countries. Oil has also been buoyed by this month's announcement by the United States that it would withdraw from the 2015 Iran nuclear arms treaty and renew sanctions against the OPEC member.

U.S. investment bank Jefferies said sanctions against Iran could remove more than 1 million bpd from the market.

The U.S. oil rig count held steady at 844 this week after rising for six weeks in a row, General Electric Co's Baker Hughes energy services firm said.

BP Plc, however, expects the rally to cool off. The oil major's chief executive, Bob Dudley, told Reuters he saw the price of oil falling to between $50 and $65 a barrel due to surging shale output and OPEC's capacity to boost production.

— CNBC's Tom DiChristopher contributed to this report.