Oil Slides on Disappointing U.S

Crude Oil

Oil Slides on Disappointing U.S

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.

US sanctions on Venezuela have been viewed as supportive for prices by helping tighten global supplies. The government's official supply report due later on Wednesday.

Daniel Yergin, vice chairman of IHS Markit, agreed: "I think the oil price is moved by what happens with the overall financial markets; it means sentiment will have a bigger impact on the oil price, [and] a big surge in US oil production becomes bearish for the global market so you get more and more complicated feedback loops".

National Security Adviser John Bolton and Treasury Secretary Steven Mnuchin announce sanctions against Venezuela state-owned oil company PDVSA and embattled president Nicolas Maduro.

The Energy Information Administration reported Wednesday that domestic crude supplies rose by 1.3 million barrels for the week ended February 1.

International Brent crude oil futures were at $62.72 a barrel, also up 21 cents or 0.4 percent, after closing down 0.4 percent in the previous session.

U.S. West Texas Intermediate (WTI) crude was down 55 cents at $53.11.

Crude futures earlier posted around two-month highs. The United States is now the world's largest oil producer, ahead of traditional top suppliers Russian Federation and Saudi Arabia.

About a dozen tankers carrying over 7 million barrels of Venezuelan crude and products were anchored this week at the U.S Gulf Coast waiting for directions on how to pay for the cargoes following the sanctions, according to Refinitiv Eikon data.

Lower OPEC output and hopes of some progress over the US-China trade dispute have helped Brent prices recover to around US$60 per bbl, although the outlook on oil demand remains subdued.

USA imports of Venezuelan crude fell 41 percent to 345,000 barrels a day last week, the least since August, according to preliminary EIA data.

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

However, while OPEC is cutting output, the United States has expanded supply, with production most recently totaling 11.9 million bpd.

US President Donald Trump last week said he would meet with Chinese President Xi Jinping, perhaps twice, in the coming weeks to try to seal a comprehensive trade deal with Beijing, but acknowledged it was not yet clear whether a deal could be reached.

“With higher production from non-OPEC producers, especially the USA, over the last few years, OPEC's market share has been shrinking, ” said James Williams, energy economist at WTRG Economics.

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