US oil prices dip on rising crude inventories, record output

07 February, 2019, 14:56 | Author: Brooke Harris
  • Oil Slides on Disappointing U.S. Data After Hitting Two-Month High

Supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies since January have been supporting prices.

Less foreign oil is reaching American shores, as OPEC production cuts kick in and USA sanctions on Venezuela curb its exports.

"The key supply story remains the ongoing OPEC production cuts", USA bank Goldman Sachs said on Wednesday.

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.

"The ban. dramatically ramps up the sanctions to a global level and could potentially result in a loss of most Venezuelan output", French bank Societe Generale said in a note published on Wednesday.

"All in all this report is bullish for crude oil and refined product prices".

US crude oil inventories C-STK-T-EIA climbed by 1.3 million barrels in the week that ended February 1 to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.

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International Brent crude oil futures had yet to trade.

U.S. West Texas Intermediate (WTI) crude was down 55 cents at $53.11. The global benchmark crude was at an $8.36 premium to WTI for the same month.

According to EIA, total motor gasoline inventories in the country increased by 500,000 barrels last week, about 5 percent above the five-year average for this time of year.

A flotilla loaded with Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest USA sanctions on Venezuela and others whose buyers are weighing who to pay.

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. -China trade war, which has dragged on world markets as investors worry that the dispute could contribute to a potential global economic slowdown.

But for those who prefer to scrutinize the trading community, then get set for more wild price swings: that was the message delivered by Robert McNally, president of Rapidan Energy Group, who said, "In this boom-bust era, as in prior ones, you can have a year or two of stability, but in general when you don't have an effective swing producer and you have big imbalances and geopolitical risk, there's volatility".

USA distillate stocks fell by 2.3 million barrels, while inventories of other refined fuels dropped by 2.9 million barrels. Prices are likely to remain rangebound, or drift sideways to lower until the USA and China reach a trade deal.

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