Published: Fri, February 08, 2019
Money | By Arnold Ball

U.S. oil prices edge up as market eyes tighter supply

U.S. oil prices edge up as market eyes tighter supply

Another factor behind the oil market rally is the supply cuts imposed by the member-states of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers.

Moreover, Venezuela is struggling to export oil because of United States sanctions in support of "interim president" Juan Guaidó, who is challenging the incumbent Hugo Chávez.

Meanwhile, hopes for thawing China-US relations have also helped ease concerns over slowing economic growth.

"You have the sanctions on Venezuela, on top of the reduced supply from Saudi Arabia", Olivier Jakob, oil analyst at Petromatrix, said as cited by Reuters. "There's no sign of overhang in the crude oil markets".

According to the Energy Information Administration (EIA), U.S. crude oil inventories climbed by 1.3 million barrels in the week-ended February 1 to 447.21 million barrels.

U.S. West Texas Intermediate (WTI) crude futures were at $53.74 per barrel at 0153 GMT, up 8 cents from their last settlement. The contract increased 35 cents to $54.01 on Wednesday.

International Brent crude oil futures on Monday were down 20 cents, or 0.32 percent at 0339 GMT to $62.54 a barrel, after closing up 3.14 percent in the previous session to their highest close since November 21.

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Crude futures earlier posted around two-month highs.

Venezuela, which produced 1.15 million barrels per day in December, was forced to look for alternative clients for its crude oil following sanctions that prevent the state oil company PDVSA from exporting to the US unless the revenues are paid to opposition leader Juan Guaido. USA crude output stayed at a record-high 11.9 million barrels a day.

The fund would receive income accrued by state-run oil firm PDVSA's U.S. unit Citgo Petroleum Corp since last month, when U.S. President Donald Trump recognized opposition leader Juan Guaido as Venezuela's legitimate head of state, Carlos Paparoni said in an interview.

"The fact that US crude oil and gasoline stocks rose more sharply than expected, as reported by the API after close of trading yesterday, is weighing on prices", said Carsten Fritsch, analyst at Commerzbank.

Traders are watching how long a partial closure of the Keystone oil pipeline would last after the discovery of a possible leak in the area of St. Louis Missouri.

Market participants are also watching for developments surrounding the U.S.

More stringent sanctions on Venezuela that bar companies that do business with PDVSA from accessing the US financial system resemble Washington's measures on Iran, ANZ Banking Group said.

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