WTI met some fresh buying interest earlier in the day on rumours that the United States could impose sanctions on Venezuelan oil exports in response to the rising social turmoil in the Caribbean country. This week, things got worse.
Tensions flared anew this week as National Assembly leader Juan Guaido moved to oust strongman President Nicolas Maduro, with the backing of the US and other countries.
In a news conference, Guaido, who this week declared himself acting Venezuelan president, said he is preparing to dismiss the head of state-run oil company Petroleos de Venezuela SA as well as the board of its Houston-based refining arm, Citgo Petroleum Corp, taking on two of the power centers that help to bankroll the Maduro government.
"It would make a tight market even tighter". Equity markets rallied around the globe on encouraging earnings reports and word that the U.S. Federal Reserve was considering an early halt of efforts to reduce its balance sheet.
The ongoing OPEC+ agreement to curb oil output remains the nearly exclusive source of support for prices. "Looking ahead, consumer prices will rise 10 million percent in 2019, according the report".
"The crude market is now focusing on global growth concerns primarily ..." Furthermore, if there is a positive boost to GDP growth projections from the 35-day long U.S. government shutdown ending, the commodity could benefit from the economy getting back on track faster than expected. Despite Friday's gains, oil and equities remained on track for their first losing week of the year.
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West Texas Intermediate crude for March delivery climbed 56 cents to $53.69 a barrel at the close of trading on the New York Mercantile Exchange. The U.S. imported about 17.7 million barrels of crude oil and petroleum products from Venezuela in October 2018, according to the Energy Information Administration. A report from the American Petroleum Institute on Thursday said that the USA has surplus gasoline stockpiles that "could approach burdensome levels" and force gas prices down further.
During the week ending November 30, 2018, the United States exported more crude oil and petroleum products than it imported for the first time in weekly data going back to 1991.
The OPEC member has already seen its output drop 50% in five years as a spiraling economic crisis takes its toll on the oil industry.
RBC Europe pointed out that "Venezuelan production will decline by an additional 300,000-500,000 barrels per day [bpd] this year, but such punitive measures could expand that outage by several hundred thousand barrels".
Internal conflict could result in a much bigger and longer-lasting disruption.