Oil rises as Saudi Arabia cuts supply to U.S., Venezuela struggles to keep up exports
Oil prices rose for a third day on Thursday, pushed up by lower imports into the United States amid OPEC efforts to tighten the market, and as Venezuela struggles to keep up its crude exports after Washington imposed sanctions on the nation.
U.S. West Texas Intermediate (WTI) crude futures were at $54.63 per barrel at 0445 GMT, up 40 cents, or 0.7 percent, from their last settlement.
International Brent crude oil futures were up 59 cents, or 1 percent, at $62.24 per barrel.
The price rise came after a report from the U.S. Energy Information Administration (EIA) on Wednesday showed a drop in Saudi crude supply to the United States.
“Crude oil prices were stronger after signs emerged that OPEC cuts are impacting trade. EIA’s weekly report showed that U.S. imports from Saudi Arabia fell by more than half from the previous week to 442,000 barrels per day (bpd). This is the
second lowest level in weekly data going back to 2010,” ANZ bank said.
Saudi Arabia is the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-OPEC producers, including Russia, announced supply cuts late last year aimed at tightening the market and propping up prices.
U.S. 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 U.S. 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 authorization to set sail, shipping data showed.
Despite these disruptions, oil remains in ample supply, not least because of soaring U.S. crude oil production, which jumped by more than 2 million bpd last year to a record 11.9 million bpd.
This shows in high U.S. commercial crude oil stockpiles, which rose by 919,000 barrels in the week to Jan. 25, to 445.94 million barrels, EIA data showed. Stockpiles are 6.6 percent higher than a year ago.