Oil falls 1% as supply concerns fade

OPEC's oil exports to US fell to five-year low in January

OPEC's oil exports to US fell to five-year low in January

Oil facilities are seen on Lake Maracaibo in Cabimas, Venezuela January 29, 2019.

The curious phenomenon of concerns over economic growth being softened somewhat by the prospect of tighter supply due to Venezuela repeated itself on Monday within the crude trading community, as West Texas Intermediate fell 70 cents to $54.56 per barrel and Brent dropping 24 cents to $62.51 per barrel.

Oil prices mostly held earlier losses on Wednesday after weekly USA government data showed an increase in crude stockpiles. Distillate stockpiles alone fell by 2.26 million barrels, compared with a decline of 2 million barrels forecast in a Bloomberg survey.

The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran previous year, experts said on Friday after looking at details posted by the Treasury Department. "Inventory reports need to confirm any bullish reports if this bounce in oil is to continue", Hekmati added.

Expectations of reduced supplies following a December accord by OPEC, and non-OPEC nations like Russian Federation, to reduce output by 1.2 million barrels per day is expected to contribute to support the market.

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Crude shipments to the USA from OPEC and its partners fell to 1.41 million barrels a day in January, the lowest in five years, according to data from cargo-tracking and intelligence company Kpler.

The producers, known as OPEC+, began cutting production from last month to avert a new supply glut and OPEC has delivered nearly three-quarters of its pledged cutback already. The EIA noted that, eventually, the full effects of United States sanctions will eventually eliminate imports from the Caribbean country, although the agency "does not anticipate any significant decrease in USA refinery runs as a result of these sanctions". “The plus side for USA producers is that they get the higher price benefit without cutting their own production.”. Oil fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

U.S. President Donald Trump said in his State of the Union address that a trade deal was possible with China.

Traders are still anxious about the global economic slowdown especially because of the uncertainty surrounding the U.S. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

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