Oil Falls on US Factory Data

Ann Santiago
February 7, 2019

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 U.S. oil rig counts and sanctions on Venezuelan oil sales. The cartel and the world's biggest exporter, Saudi Arabia, slashed its output more than expected under the OPEC deal, to 10.2 million barrels a day in January and is aiming to pump around 100,000 barrels less in February.

The potential gusher comes as Venezuela's production plunges amid an economic crisis and USA sanctions targeting the country's oil sector.

US West Texas Intermediate (WTI) crude futures gained 43 cents, or 0.8 percent, to $54.09 a barrel after posting a session low of $52.86 a barrel.

However, US crude stocks rose last week even as refineries boosted output, while gasoline and distillate stocks increased, data from industry group the American Petroleum Institute showed on Tuesday.

Prices have been buoyed by a new round of supply cuts from the Organization of the Petroleum Exporting Countries and its allies that began in January.

International Brent crude oil futures on Monday were down 20 cents, or 0.32 percent at 0339 GMT to $62.54 a barrel, after closing up 3.14 percent in the previous session to their highest close since November 21.

The January decrease was the largest in the past 12 months as Opec cut production in response to falling oil prices.

The official, who is also Venezuela's representative to OPEC, added that Caracas would do everything possible to minimise the effects of United States sanctions on the oil and gas giant on the market.


Inventory data from the Energy Information Administration will be released later today.

Despite hitting a 2-month high last week, crude oil prices have been chopping inside a tight range for several days as investors try to determine the key catalyst in the market at this time.

Meanwhile, imports are set to drop further as the USA slapped sanctions on Venezuelan state oil company PDVSA.

OPEC's share of the cut is 800,000 bpd, to be delivered by 11 members - all except Iran, Libya and Venezuela. Brent was up more than one percent and trading at $64.40 a barrel as of 10:49am GMT.

Worries about weaker global economic growth and the U.S.

Meanwhile, hopes for thawing China-US relations have also helped ease concerns over slowing economic growth. 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 trade talks next week.

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