Published: Thu, February 07, 2019
Markets | By Erika Turner

Oil falls, torn between poor USA factory data and tighter supply

Oil falls, torn between poor USA factory data and tighter supply

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.

The API reported a 2.5M barrel build during last week.

However, Venezuela's woes assuaged traders' mounting fears to a degree, with the USA sanctions limiting oil transactions between the Bolivian republic and other countries, and the European Union considering imposing more sanctions on the government of president Nicolas Maduro.

US crude futures were down 50 cents, or 0.9 percent, at $54.06 a barrel by 1400 GMT.

Also weighing on crude prices, the American Petroleum Institute said United States crude oil supplies rose by more than 2.5M barrels during last week, adding to the previous build.

Meanwhile, oil supply from the OPEC fell in January by the largest amount in two years, a Reuters survey found.

Brent crude futures were down 46 cents, or 0.7 percent, at $62.05 a barrel, off a high of $63.63.

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The producers' alliance, known as OPEC+, began cutting production from last month to avert a new supply glut.

A report published by the US Energy Information Administration (EIA) last week showed that the country's oil production averaged a record 11.9 million barrels a day in November, up 345,000 from October and up almost 1.8 million compared with November 2017's average figures.

"Anything out of the State of the Union that hints at the US-China deal not working out, or more anti-trade rhetoric would be a negative for energy prices as demand would be lower if global growth keeps being downgraded", said Alfonso Esparza senior market analyst, OANDA.

Citgo, the eighth-largest US refiner and Venezuela's top foreign asset, is in the middle of a tug of war as the Trump administration has made aggressive moves to remove it from Maduro's control. Bullish traders are banking on the Venezuelan oil sanctions and the OPEC-led production cuts to provide support.

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. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

WTI futures were up $0.46, or 0.84%, at $55.02 per barrel by 0940 GMT.

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.

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