Oil rose for a third day as a deepening crisis in Venezuela that threatens to complicate OPEC’s task of balancing world oil supplies outweighed a surprise jump in U.S. crude inventories.
Futures in New York extended gains on Friday, erasing a weekly loss. U.S. President Donald Trump’s recognition of Venezuela’s opposition as its real government and the threat of sanctions on the Latin American nation’s oil exports have dealt a big blow to President Nicolas Maduro. U.S. crude inventories rose the most since November last week and gasoline stockpiles climbed to a record high, the Energy Information Administration said Thursday.
Venezuelan production will probably drop by 300,000 to 500,000 barrels a day this year, but sanctions could expand the outage by several hundred thousands of barrels, RBC Capital Markets strategists Helima Croft and Michael Tran wrote in a note. “The road back for Venezuela will be extremely arduous given the depths of the economic and humanitarian crisis.”
Crude has rallied 19 percent so far in January, set for its best month since April 2016, as the Organization of Petroleum Exporting Countries and its allies started fresh output cuts. But managing the Venezuela crisis could become difficult for the group if Washington opts to impose wider sanctions, which may tip the market into deficit. Conversely, the possibility of a regime change raises hopes for an eventual production rebound in a country that has lost 50 percent of its output in the past five years.
West Texas Intermediate crude for March delivery rose 67 cents to $53.80 a barrel on the New York Mercantile Exchange as of 1:59 p.m. in Tokyo. It rose as much as 81 cents Friday and is little changed for the week.
Brent for March settlement added 62 cents to $61.71 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 99 cents for the week. The global benchmark crude was at an $7.96 premium to WTI.
Source : Bloomberg