Published: Thu, February 07, 2019
Money | By Ralph Mccoy

US oil, gasoline inventories up in latest week

US oil, gasoline inventories up in latest week

The Organization of the Petroleum Exporting Countries and its allies, including Russian Federation, agreed to production cuts effective from last month to beat back supply growth.

Oil fell below $62 a barrel on Wednesday after a report showed a rise in US crude inventories, while concerns about the impact on global supplies of USA sanctions on Venezuela faded.

"While Venezuela's output reportedly rose last month, fresh USA sanctions on the country could see 0.5 to 1 percent of global supply curtailed", said Vivek Dhar, commodities analyst for Commonwealth Bank of Australia in a note on Monday.

Daniel Yergin, vice chairman of IHS Markit, agreed: "I think the oil price is moved by what happens with the overall financial markets; it means sentiment will have a bigger impact on the oil price, [and] a big surge in US oil production becomes bearish for the global market so you get more and more complicated feedback loops". While sanctions on Venezuela and Iran are supportive of prices, investors are wary before U.S.

Crude inventories rose by 2.5 million barrels in the week ended February 1 to 448.2 million, compared with analysts' expectations for an increase of 2.2 million barrels.

U.S. West Texas Intermediate (WTI) crude futures were at $54.77 per barrel at 0223 GMT, up 21 cents or 0.4 percent.

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International Brent crude oil futures had yet to trade. These factors have helped lift the price from a low of $42.95 in late December to its current level around $55.30 per barrel - not far from the 2-1/2 month high reached Monday. OPEC supply fell last month by the largest amount in two years, a Reuters survey last week found. Distillate fuel production increased, averaging 5.1 million barrels per day.

Global economic worries have weighed on market sentiment in recent days, offsetting support from signs that global supplies are tightening.

“Looking ahead, the 2019 demand outlook for oil is not great, while the prospects of increased shale supply and competition elsewhere could keep the pressure on prices, ” he said.

At the same time, Venezuela's exports to the USA dropped by almost 30%.

“With higher production from non-OPEC producers, especially the US, over the last few years, OPEC's market share has been shrinking, ” said James Williams, energy economist at WTRG Economics.

While OPEC and allied producers are slashing their output in an attempt to boost crude prices, which saw a rapid fall a year ago, the USA has been opposing the measure and vowed to continue expanding its supply. "China trade talks", said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

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