Stockpiles Soar, Oil Holds Losses

Oil Holds Gains on Signs of Shale Slowdown as OPEC Output FallsMore
Oil Holds Gains on Signs of Shale Slowdown as OPEC Output FallsMore

08 February, 2019

US sanctions on Venezuela have been viewed as supportive for prices by helping tighten global supplies.

According to the Weekly Petroleum Status Report, U.S. crude oil imports averaged 7.1 million barrels per day last week, up by 63,000 barrels per day from the previous week, while crude oil exports saw a daily average of 2.9 million barrels, up by 926,000 barrels per day from the previous week. Meanwhile, support from the lower trendline around $53.65 should limit any near-term falls.

Benchmark Brent crude had slipped 62 cents to $61.36 a barrel by 1000 GMT, after rallying about 15 percent in January.

Prices also dipped after data showed US crude inventories at Cushing, Oklahoma, the delivery point for USA crude futures, rose by more than 943,000 barrels in the week to February 1, traders said, citing data from market intelligence firm Genscape. Distillate stockpiles alone fell by 2.26 million barrels, compared with a decline of 2 million barrels forecast in a Bloomberg survey.

"Distillate demand increased sharply last week due to the extreme cold weather, which contributed to the declining distillate stocks", Commerzbank analyst Carsten Fritsch said.

Earlier, oil price came under pressure following weekly data showing rise in United States stocks.

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Higher American output is threatening to offset cuts by the Organization of Petroleum Exporting Countries and its allies.

U.S. sanctions on Venezuela's state oil company could also lift prices, though they have yet to trigger any sharp increase. The sanctions aim to block USA refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro. The existing tariff schedule is likely to remain in place, however, news reports said.

That focuses yet more attention on the outcome of U.S.

The Bloomberg Dollar Spot index has risen 1 percent this month, capping gains in crude and other commodities priced in the currency. -China trade war, which has dragged on world markets as investors worry that the dispute could contribute to a potential global economic slowdown. Oil fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

Adding to the bearish sentiment, CNBC reported that a meeting between President Donald Trump and his Chinese counterpart Xi Jinping was "highly unlikely" before the March 1 deadline set by the US for reaching a trade deal. Prices are likely to remain rangebound, or drift sideways to lower until the USA and China reach a trade deal.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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