 Oil prices rise amid ongoing concern about Venezuela Washington (UPI) Jan 30, 2019 - Crude oil prices rose Wednesday amid expectations that Venezuelan oil shipments would see some disruption following U.S. sanctions, while traders awaited news later in the day regarding recent U.S. inventory levels and possible interest rate changes. West Texas Intermediate crude future prices rose 1 percent to $53.85 per barrel as of 8:10 a.m., while Brent crude futures rose 0.9 percent to $61.75 per barrel. "Recent sanctions in Venezuela have market participants positioning for a higher price environment," Amir Hekmati, oil futures spec trader at Lucid Energy, told UPI. "WTI has rallied nearly $12 from the December low of $42.67. From a technical standpoint, WTI could be forming an inverse head and shoulder pattern indicating continued upside from these price levels," he added. Meantime, supply inventories have "yet to fall materially after Saudi output cuts," he said. Saudi Arabia agreed in December to lead an output reduction by OPEC countries of about 800,000 barrels per day starting in January. Prices are also likely to be strongly influenced by comments from U.S. Treasury Secretary Steve Mnuchin, who said in an interview "that further sanctions on Venezuela are being considered," FxAnalyst Ilya Spivak separately said in a report sent to UPI. Venezuela, which according to OPEC produced about 1.15 million barrels of crude oil daily in December, is already facing U.S. sanctions announced this week. Under the new sanctions, the nation can sell oil to U.S. companies but all revenue can only be directed to accounts where the leader of the opposition-led Congress, Juan Guaido, has access. Venezuelan President Nicolas Maduro -- who, according to the opposition and several other countries, lost legitimacy at the start of his second term following controversial elections last year -- has stepped up the confrontation by allowing the Supreme Court to freeze accounts of Guaido and ban his travel. The ban is likely to curb shipments to the United States, where the Venezuelan oil company PDVSA owns the refiner and fuel retailer Citgo. Other big buyers of Venezuelan oil are China and India. The U.S. Energy Information Administration is set on Wednesday morning to provide its latest petroleum inventories report. The U.S. Federal Reserve Chairman Jerome Powell also has a press conference scheduled on Wednesday. Any increase, or hints of an increase, of interest rates would affect the market. "Traders expect him to come across as dovish, while acknowledging the slowing global economy. He is going to try to avoid agitating the financial markets so expect a soft tone," James Hyerczyk, analyst at FxEmpire, said in a report.
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Crude oil prices were nearly flat Thursday morning in what was seen as a pause after gains in the two previous sessions, while traders weighed the impact of possible geopolitical-related supply and demand issues.
"Crude is pausing for breath after yesterday's solid rally," Matthew Smith, director of commodity research at ClipperData, told UPI.
West Texas Intermediate crude future prices fell 0.1 percent to $54.18 per barrel as of 8:00 a.m. EST, while Brent crude futures rose about 0.2 to $61.63 per barrel.
The WTI price has gained from $51.99 per barrel on Monday and is up from $45.41 per barrel at the start of the month. Brent is up from $59.81 per barrel on Monday and $53.80 per barrel at the start of the year.
"Trade war progress -- or lack thereof -- is once again being pitched versus supply concerns to keep prices showing a lack of conviction," Smith added.
The United States and China, the world's two biggest economies, have been making efforts to try to reach trade accords before March, when new tariffs are to go into effect unless an agreement is reached.
The United States, which is demanding concessions from China such as the elimination of trade practices it considers unfair, last year imposed tariffs against China to use as leverage. China reacted with countertariffs, leading to more tariffs from the United States.
China is the world's leading crude oil importer and any economic slowdown there resulting from the ongoing trade dispute with the United States would lead to lower crude demand and weaker prices.
On the other hand, there are also supply concerns that have been pushing crude oil prices higher in recent sessions.
"While Venezuela remains front and center, Libyan exports have shown a solid drop this month, while Saudi Arabian deliveries to the U.S. have slammed on the brakes," Smith said.
The supply from Venezuela, which produced in December 1.15 million barrels of crude oil per day, is likely to see disruptions after the United States imposed sanctions against state oil company PDVSA.
The sanctions prevent any payment by U.S.-based companies, including the Venezuelan fuel refining and retailing subsidiary Citgo, to go to accounts within Maduro's reach. Instead, the funds can only be available to the leader of the Venezuelan National Assembly, which was appointed by the institution to be the interim president until new elections are held.
Maduro has reacted by seizing the accounts of the National Assembly leader Juan Guaidó, and there is great uncertainty as to what will happen next in Venezuela -- where oil production has steeply and steadily declined in the past years.
Libya saw a 172,000-barrel-per-day month-over-month December output reduction, according to OPEC. This was the impact of oil fields shut down after they were occupied by a militia, as country officials reported.
As for Saudi Arabia, it is reducing output on purpose in a bid to help a recovery in oil prices, which are down from a peak in October 3 when Brent traded over $86 per barrel and WTI at over $76 per barrel.
OPEC countries agreed in Vienna in December to reduce production by 800,000 barrels per day starting in January, with Saudi Arabia leading the initiative. Saudi Arabia, OPEC's biggest producer, cut its December output by 468,000 barrels per day to 10.6 million barrels per day.
Some non-OPEC countries led by Russia agreed to match the cuts with a 400,000 barrel per day total reduction of their own.
The total 1.2 million barrel per day cut was to take effect January 1.
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