Venezuela chaos drives Brent crude higher

London — Benchmark oil prices edged higher on Wednesday, boosted by further disruptions to Venezuela’s crude exports which have helped tighten global inventories in recent weeks.

Brent added 13 US cents, or 0.2%, to $68.10 a barrel by 9.10am GMT, and was not far off its year-to-date high of $68.69 reached last week.

US crude futures were, however, down 19c at $59.75 a barrel after a report that domestic crude inventories rose.

Venezuela’s main oil export port of Jose and its four crude upgraders were unable to resume operations following a massive power blackout on Monday, the second in a month.

Crude exports from the key Opec member have dropped sharply since Washington in January banned U.S. refiners from buying Venezuelan oil.

Prices have risen more than 25% this year, supported by supply curbs by Opec and other major producers, along with US sanctions on exports from Venezuela and Iran.

At the same time, short-term disruptions in the US have also lent support.

The US Coast Guard on Monday reopened portions of the Houston Ship Channel with restrictions on waterways affected by a petrochemical leak and fire outside Houston that have disrupted ship traffic.

The disruptions to transport and refining operations will weigh heavily on US inventories, Stephen Schork, editor of The Schork Report, said in a note.

Also, crude flows from two key shale basins to the Cushing, Oklahoma delivery point for US crude futures slowed in March due to winter production outages, dealers said.

US prices were nevertheless weighed down by a report from the American Petroleum Institute, a trade organisation, that US crude inventories rose 1.9-million barrels last week, while analysts had forecast a 1.2-million barrel-drop.

The market was awaiting weekly official figures from the department of energy due later on Wednesday.

Brent crude traded in a relatively narrow range of $64-$69 a barrel throughout March, reflecting the tension between tightening supplies and concerns over global demand.

“We seem to have reached a state of equilibrium after the recent headline-driven choppy trading, and we need to see some new impetus for price direction,” said Jeff Halley, senior market analyst at Oanda in Singapore.

That is unlikely until a conclusion is reached in US-China trade talks, he added, referring to negotiations due to restart on Thursday as the world’s two largest economies seek to end an eight-month-old trade war.

Hedge funds and other money managers have increased bets that demand for oil will be sustained, even as the market rallied last week.

Reuters