Oil rises as sanctions eat into Venezuelan exports

Singapore — Oil prices rose for a third day on Thursday, pushed up by lower imports into the US amid Opec’s efforts to tighten the market, and as Venezuela struggles to keep up its crude exports after Washington imposed sanctions on the nation.

US West Texas Intermediate (WTI) crude futures were at $54.63 a barrel at 4.45am GMT, up 40c, or 0.7%, from their last settlement.

International Brent crude oil futures were up 59c, or 1%, at $62.24 a barrel.

The price rise came after a report from the US Energy Information Administration (EIA) on Wednesday showed a drop in Saudi crude supply to the US.

“Crude oil prices were stronger after signs emerged that Opec cuts are impacting trade. EIA’s weekly report showed that US imports from Saudi Arabia fell by more than half from the previous week to 442,000 barrels a day. This is the second lowest level in weekly data going back to 2010,” ANZ bank said.

Saudi Arabia is the de-facto leader of Opec, which together with some non-Opec producers, including Russia, announced supply cuts late in 2018 aimed at tightening the market and propping up prices.

US sanctions imposed on Venezuela’s state-oil firm PDVSA this week are also causing some supply disruptions.

Venezuela’s oil inventories have started to build up at the country’s ports and terminals as PDVSA is finding it cannot export crude at its usual rate due to US sanctions imposed earlier this week.

As of Wednesday, Venezuela had 25 tankers with nearly 18-million barrels of crude — representing about two weeks of the country’s production — either waiting to load or expecting authorisation to set sail, shipping data showed.

Despite these disruptions, oil remains in ample supply, not least because of soaring US crude oil production , which jumped by more than 2-million barrels a day in 2018 to a record 11.9-million barrels a day.

This shows in high US commercial crude oil stockpiles , which rose by 919,000 barrels in the week to January 25, to 445.94-million barrels, EIA data showed. Stockpiles are 6.6% higher than a year ago.

Reuters