Published: Thu, February 07, 2019
Markets | By Otis Pena

Oil Edges Up As Market Eyes Tighter Supply

Oil Edges Up As Market Eyes Tighter Supply

Stocks gained by 1.3 million barrels in the week ended February 1, compared with analysts' expectations for an increase of 2.2 million barrels. The West Texas Intermediate (WTI) for March delivery erased 0.90 US dollar to settle at 53.66 dollars a barrel on the New York Mercantile Exchange.

However, US crude stocks rose last week even as refineries boosted output, while gasoline and distillate stocks increased, data from industry group the American Petroleum Institute showed on Tuesday.

At the same time, Venezuela's exports to the US dropped by almost 30%.

Even as the fate of crude oil imports by the United States from Venezuela remains uncertain due to sanctions on the latter, these shipments may not necessarily flood the market in India, the third-largest importer of oil from the South American nation.

Crude shipments to the US from OPEC and its partners fell to 1.41 MMbpd in January, the lowest in five years, according to data from cargo-tracking and intelligence company Kpler.

In an interview aired by private broadcaster Televen, Manuel Quevedo, also president of the oil company, commented on USA sanctions imposed last week on PDVSA and its US subsidiary Citgo.

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.

Analysts said that us sanctions on Venezuela had focused market attention on tighter global supplies.

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If sanctions compel USA oil companies to wind down their business in the Latin American nation, production could sink to 600,000 barrels a day, according to Rapidan Energy Group.

Longer-term investors believe the OPEC-led production cuts could eventually trim the global supply glut while stabilizing prices.

"The collapse in oil prices late a year ago has resulted in more cautious spending by U.S. oil explorers", said Dhar.

The January decrease was the largest in the past 12 months as Opec cut production in response to falling oil prices.

Venezuela, like fellow OPEC members Iran and Libya, was exempt from production curbs under the deal on expectations that its output faced involuntary downward pressure in 2019.

WTI futures were at 54.65 dollars per barrel at 0810 GMT, up nine cents or 0.16 per cent.

The oil market has also been aided by a slight pick-up in risk sentiment over the last month as US-China trade tensions are dialled down a touch. -China trade dispute have also weighed on the market.

Senior US and Chinese officials are poised to start another round of trade talks next week.

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