Oil rises 1 percent on signs of tightening global oil supply

Daniel Fowler
February 7, 2019

Prices also dipped after data showed USA crude inventories at Cushing, Oklahoma, the delivery point for US crude futures, rose by more than 943,000 barrels in the week to February 1, traders said, citing data from market intelligence firm Genscape.

The measures against Venezuela's state-run oil company are the strongest yet against President Nicolas Maduro, who has overseen an economic collapse and an exodus of millions of Venezuelans in recent years.

Weighing on oil markets, USA government data showed new orders for US -made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.

Crude shipments to the USA 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.

Output declines from the Organization of the Petroleum Exporting Countries (OPEC) as they make good on their pact to curb a supply overhang were compounded by falling USA oil rig counts and sanctions on Venezuelan oil sales.

Guaido's team is planning for a post-Maduro government with an emergency scheme to supply fuel domestically, given widespread shortages across Venezuela, Goicoechea said.

US West Texas Intermediate (WTI) crude futures were at $53.74 per barrel at 0153 GMT, up 8 cents from their last settlement. USA crude was down 48 cents at $53.18.

USA oil imports from Opec countries have dropped to five-year lows as the oil producing cartel cuts output, while USA domestic production grows.

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The producers known as OPEC+ started cutting production by 1.2 million barrels per day (bpd) from last month to avert a new supply glut, and OPEC has delivered nearly three quarters of its pledged cuts already, a Reuters survey showed last week.

Analysts said US sanctions on Venezuela had focused market attention on tighter global supplies.

"The global oil supply/demand balance could shift from a current significant surplus to zero at the end of the year", Pictet Wealth Management analyst Jean-Pierre Durante wrote in a report.

OPEC's share of the cut is 800,000 bpd, to be delivered by 11 members - all except Iran, Libya and Venezuela.

Market participants are also watching for developments surrounding the U.S.

Also dampening market sentiment still were worries about weaker global economic growth and the US-China trade dispute. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January. Senior U.S. and Chinese officials are poised to start another round of talks next week.

"The United States is now the number one producer of oil and natural gas anywhere in the world", Trump said during his State of the Union address to Congress.

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