Oil up on Venezuela turmoil despite surging U.S. supply
Oil prices rose on Friday as political turmoil in Venezuela threatened to reduce supply but fresh data on surging U.S. fuel stocks and global economic woes weighed on sentiment.
The United States signalled on Thursday it may impose sanctions on Venezuelan exports after recognising opposition leader Juan Guaido as interim president this week, prompting President Nicholas Maduro to cut ties with Washington.
Suspense over U.S.-China trade talks and broader gloom over world economic growth put a check on prices, however.
Brent crude oil futures were at $61.45 a barrel at 1450 GMT, up 36 cents, or 0.59 percent. But Brent has shed about 2.1 percent since the start of trade on Monday and is on track to post its first week of losses in four weeks.
U.S. West Texas Intermediate (WTI) crude futures were trading at $53.61 per barrel, up 48 cents, or 0.9 percent.
RBC Europe predicted that sanctions could nearly double projected output shortfalls from Venezuela.
"Venezuelan production will decline by an additional 300,000-500,000 barrels per day (bpd) this year but such punitive measures could expand that outage by several hundred thousand barrels."
Global oil markets are still well supplied, however, thanks in part to a spike in U.S. output.
Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain`s Barclays said in a note. The bank cut its 2019 average Brent forecast to $70 a barrel, from $72 previously.
The output surge has swollen U.S. fuel stocks, and crude inventories rose by 8 million barrels last week, according to official data released on Thursday.
Analysts have predicted a more balanced market due to a production cut pact by the Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia, as well as potential export disruptions in Venezuela, Iran and Libya.
"While the current state of affairs is price constructive for oil, the market is hesitant when it comes to the global outlook," Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil Forum.
Demand may start to stutter because of a global economic slowdown, which is likely to dent fuel consumption.
A trade dispute between the United States and China and tightening financial conditions around the world have hurt manufacturing activity in most economies and dragged China`s growth last year to the weakest in nearly 30 years.
According to Reuters polls of hundreds of economists worldwide, a synchronised global economic slowdown is underway and would deepen if the U.S.-China trade war escalated.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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