Published: Fri, February 08, 2019
Markets | By Erika Turner

Oil Heads Lower On Small Inventory Build

Oil Heads Lower On Small Inventory Build

Oil prices fell on Monday after disappointing US factory data sparked fresh concerns about a slowdown in the global economy, but losses were limited as OPEC-led supply cuts and USA sanctions against Venezuela pointed to tighter supply. The government's official supply report is due out later on Wednesday.

Last week, the Energy Information Administration issued a bullish weekly report on USA inventories after it revealed crude stockpiles rose by less than 1 million barrels last week, compared to expectations of a 3.1 million-barrel rise.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Thursday, but inside the previous day's range.

"WTI and Brent crude oil both remain rangebound following a failed attempt to move higher", said Ole Hansen, head of commodity strategy at Saxo Bank.

At 447.2 million barrels, the EIA said, US crude oil inventories are still above the seasonal average but not by much.

"The price has yet to react in any noticeable way", Fritsch said of the sanctions. In addition to the crude inventories, gasoline stockpiles also registered lesser than forecast increase of 513,000 barrels while distillate inventories dropped below expectations to 2.3 million barrels.

Yet some investors believe these concerns may be overblown, in light of the decline in OPEC production and a squeeze on supply from Iran and Venezuela from USA sanctions.

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US gasoline production decreased last week, averaging 9.9 million barrels per day.

Providing global markets with price support are supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) aimed at tightening the market.

Global economic worries have weighed on market sentiment in recent days, offsetting support from signs that global supplies are tightening.

Saudi Arabia, the world's top oil exporter, told OPEC it had pumped 10.24 million barrels per day (bpd) in January, two OPEC sources told Reuters, a deeper cut than targeted in the supply pact.

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. -China trade dispute. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

U.S. President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the dispute. Prices are likely to remain rangebound, or drift sideways to lower until the USA and China reach a trade deal.

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