LONDON: Oil prices rose for a third straight day on Thursday on tighter supply after US sanctions on Venezuelan exports and lower-than-expected US fuel stocks, extending a surge this month as an OPEC+ production cut pact took effect.
The Organiaation of the Petroleum Exporting Countries (OPEC), along with allies including Russia, announced supply cuts effective January 1 to tighten the market after worries over a global glut caused heavy price losses in late 2018.
Still, concerns over the outcome of US-China trade talks, which have resumed in Washington, have jangled investors' nerves.
US West Texas Intermediate (WTI) crude futures CLc1 were up $0.03 or 0.06% at $54.26 per barrel at 1215 GMT. Brent crude oil futures LCOc1 were up $0.22 or 0.36% at $61.87 per barrel. The March contract expired on Thursday.
Oil prices rise 1% on Venezuela sanctions
WTI futures were up nearly 20% compared to their December close, while Brent climbed 15%.
Data from the US Energy Information Administration (EIA) on Wednesday showed US crude oil stockpiles rose less than expected last week due to lower imports, notably a fall in Saudi crude supply.
"Crude oil prices were stronger after signs emerged that OPEC cuts are impacting trade," ANZ bank analysts wrote in a note, calling it the second lowest weekly level since 2010.
US sanctions imposed on state oil firm Petroleos de Venezuela SA (PDVSA) this week are also causing some supply disruptions.
Oil inventories have started to build up at Venezuela's oil ports and terminals as PDVSA is finding it cannot export crude at its usual rate due to US sanctions imposed 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 - waiting to load or for authorisation to set sail, shipping data showed.
Oil gains as US imposes sanctions on Venezuela, global supplies weigh
"With the likelihood of a forthcoming decline in Venezuelan production, producer cuts to rebalance the market will prove more effective," Harry Tchilinguirian, a strategist at BNP Paribas in London, told the Reuters Global Oil Forum. "Having said that, any gain in oil prices still remains contingent on the outcome of US-China trade talks."
Global markets anxiously await the outcome of talks which began in Washington on Wednesday aimed at easing a months-long tariff war between the world's top two economies.
The two-day talks are expected to be tense, with little indication that Beijing will address core US demands. If the two sides cannot reach a deal soon, Washington has threatened to more than double tariffs on Chinese goods on March 2.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ