Oil edges higher on Venezuela turmoil, but weighed by U.S. crude stock build

By Stephanie Kelly NEW YORK (Reuters) - Oil prices rose on Thursday, boosted by the U.S. threat of sanctions on OPEC member Venezuela, but gains were limited by U.S. data showing record high gasoline inventories and an unexpected big build in crude

Reuters January 25, 2019 00:05:38 IST
Oil edges higher on Venezuela turmoil, but weighed by U.S. crude stock build

Oil edges higher on Venezuela turmoil but weighed by US crude stock build

By Stephanie Kelly

NEW YORK (Reuters) - Oil prices rose on Thursday, boosted by the U.S. threat of sanctions on OPEC member Venezuela, but gains were limited by U.S. data showing record high gasoline inventories and an unexpected big build in crude.

Brent crude futures rose 14 cents to $61.28 a barrel by 12:12 p.m. EST (1712 GMT). U.S. West Texas Intermediate (WTI) crude futures rose 62 cents to $53.24 a barrel.

Washington signaled it could impose sanctions on Venezuela's crude exports as Caracas descends further into political and economic turmoil. The threat to reduce supplies supported futures prices.

"That's the big story of the day for oil," said Phil Flynn, an analyst at Price Futures Group in Chicago. "The market is really concerned about the geopolitical factors and what will happen if there are sanctions on Venezuela."

Venezuelan oil is predominantly heavy crude, which requires extensive refining. It is frequently blended with lighter crudes to give refiners higher-value products.

With Iran already crippled by U.S. sanctions, a drop in Venezuelan exports could squeeze global supply further.

Geneva-based Petro-Logistics said on its website that Iranian crude and condensate exports in December "fell steeply" from November to less than 1 million barrels per day (bpd) due to U.S. sanctions - lower than some other estimates.

The Brent and U.S. West Texas Intermediate (WTI) contract are both backed by light, sweet crude, and are not directly linked to Venezuelan oil.

But concern about the supply of heavy crudes is apparent in the U.S. physical market, where the price for Mars Sour, a medium crude, shot to its highest since early 2011.

"BEARISH" EIA REPORT

Weighing on oil futures, U.S. crude inventories sharply rose by 8 million barrels last week, the Energy Information Administration said on Thursday, versus forecasts of a decline of 42,000 barrels.

Gasoline stocks rose for the eighth straight week to a record 259.7 million barrels, as demand for the motor fuel over the past four weeks fell 0.1 percent from a year ago. [EIA/S]

"The report was rather bearish, punctuated by the large crude oil inventory increase," said John Kilduff, partner at Again Capital Management. "Gasoline demand remains anemic."

Worries about the longer-term outlook for global economic growth, and therefore demand for crude, has pressured oil prices. Persistent concerns about the U.S-China trade war as well as slower world growth forecasts have kept investors wary.

(Additional reporting by Amanda Cooper in London and Koustav Samanta in Singapore and Colin Packham in Sydney; Editing by Marguerita Choy and Edmund Blair)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.