Oil price surges amid OPEC cuts & United States sanctions against Venezuela

OPEC supply fell in January by the largest amount in two years

OPEC supply fell in January by the largest amount in two years

US crude futures were down 75 cents, or 1.39 percent, at $53.26.

A decline in OPEC production and a squeeze on supply from Iran and Venezuela because of US sanctions have led many analysts to forecast that the market will be balanced in 2019.

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.

Fritsch of Commerzbank said the Venezuelan issue could still drive oil higher.

The report revealed that there have been encouraging signs in trade talks between the USA and China over tariffs recently, and any agreement between the two countries could provide upside to oil demand, and indeed oil prices, going forward.

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

The oil price came under pressure earlier in the day following weekly data from the US Energy Information Administration on Wednesday that showed an unwelcome increase in stocks of crude oil.




Treasury Secretary Steven Mnuchin said US -imposed oil sanctions are putting pressure on the embattled Venezuelan President Nicolas Maduro, who the U.S.is trying to oust. Brent reached $63.63 a barrel, the highest since December 7, while WTI climbed to $55.75 a barrel, the strongest since November 21.

From a fundamental perspective, the price is benefiting from data suggesting that supplies from the Organization of the Petroleum Exporting Countries fell by the most in two years last month, with Saudi Arabia leading the way.

At 447.2 million barrels, US crude oil inventories are about 6 percent above the five year average for this time of year, the EIA reported. The sanctions aim to block U.S. refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro.

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

Citgo, the eighth-largest USA refiner and Venezuela's top foreign asset, is in the middle of a tug of war as the Trump administration has made aggressive moves to remove it from Maduro's control.

Providing global markets with price support are supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) aimed at tightening the market. -China talks to end a trade spat between the world's top two economies.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a delegation to Beijing next week to lay the groundwork for a meeting between Presidents Donald Trump and Xi Jinping later this month.

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