Venezuela sanctions leave oil market short of heavy crude

Venezuela sanctions leave oil market short of heavy crude

Oil prices rose on Thursday, buoyed by hopes that potential progress in the latest Sino-U.S. tariff talks would improve the global economic outlook, and as China's trade figures including crude imports beat forecasts.

Brent crude futures continue to track higher with bulls eying a break above the 2019 peak ($63.63/bbl).

The Organisation of Petroleum Exporting Countries (Opec) said it tightened its crude taps to cut nearly 800,000 barrels a day from its oil exports in January after vowing to drain excess oil from the oversupplied market.

"Even so, headline benchmark crude oil prices have hardly changed on news of the sanctions".

U.S. West Texas Intermediate (WTI) crude futures were at $54.16 per barrel at 0413 GMT, up 26 cents, or 0.5 percent, from their last settlement.

OPEC production fell to a four-year low in January as the cartel applied a new pact to boost global oil prices, the International Energy Agency said Wednesday, but Russian Federation and other ex-Soviet states failed to cut back output as much as promised.

"With so far no sign of change in government, we see increasing risks that production losses could be larger and sooner than our forecast for a 0.33 million-bpd supply loss in 2019", USA bank Goldman Sachs said in a note on Wednesday.

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The IEA also raised its estimate for the increase in non-OPEC crude supply in 2019 to 1.8 mbd, which is 0.3 mbd higher than previously.

"This is because, in terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations", the group added.

But climbing US oil stockpiles weighed on prices.

Venezuela accounted for 16 percent of OPEC output and 8 percent of world production in 1970 but those percentages had fallen to just 5 percent and 2 percent respectively by 2017 (https://tmsnrt.rs/2E4Pfb9). The improvement in the global risk tone has also provided a lift for Brent crude futures.

Optimism that a trade deal could be reached between the United States and China was boosted when U.S. President Donald Trump said talks were going "very well".

Crude inventories built for a fourth week in a row, rising 3.6 million barrels to 450.8 million barrels in the week to February 8. Analysts were looking for a build of about 2.300 million barrels.

Oil has advanced around 19 percent this year as the OPEC+ alliance of producers cut output, but the rally has sputtered in February amid record US shale drilling.

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