Published: Thu, February 07, 2019
Economy | By

Oil rises on tighter supply but USA factory data weighs

Oil rises on tighter supply but USA factory data weighs

The American Petroleum Institute reported late Tuesday that US crude inventories rose by 2.5 million barrels last week at a time of weakening global demand, Morning Star reported.

Oil prices have been on the rise since the US Treasury announced the seizure of $7 billion in assets of Venezuela's state oil firm PDVSA and its US subsidiary Citgo last week.

“With that in mind, keep an eye on [American Petroleum Institute supply] data later [Tuesday], followed by tomorrow's more definitive [Energy Information Administration] print, where a mixed consensus of expectations leaves room for stronger than anticipated draw to crude stocks to bring in some mid-week price support, ” he said.

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.

Oil prices fell sharply today as a report showed a rise in us inventories and fears about the impact of sanctions on Venezuela started to fade. The government's official supply report is due later on Wednesday.

Global benchmark Brent crude dropped almost 1% to $61.39 a barrel while WTI futures were down more than 1% at $53.12 a barrel. U.S. West Texas Intermediate (WTI) crude was down 33 cents at $53.33.

The head of state-run Kuwait Petroleum Corp, Hashem Hashem, said on Tuesday that global oil supply could be hit this year by big reductions in exports from Venezuela. The sanctions will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran past year, some analysts said after examining details announced by the USA government.

OPEC, Russia and other non-OPEC producers - an alliance known as OPEC+ - agreed in December to reduce supply by 1.2 million barrels per day (bpd) from January 1.

"The collapse in oil prices late past year has resulted in more cautious spending by United States oil explorers", said Dhar.

The oil industry generally believes the curbs will help balance the market this year.

OPEC oil supply fell in January by the largest amount in two years despite sluggish production declines from Russian Federation, according to a Reuters survey.

Last week, China said its manufacturing activity contracted for the second-straight month in January, another sign that the world's second-largest economy is slowing down amid domestic headwinds and the on-going trade dispute with the U.S.

US President Donald Trump last week said he would meet with Chinese President Xi Jinping, perhaps twice, in the coming weeks to try to seal a comprehensive trade deal with Beijing, but acknowledged it was not yet clear whether a deal could be reached.

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