U.S. crude oil refinery inputs increase last week

Jeannie Matthews
February 8, 2019

Oil prices edged higher for the first time in three sessions on Wednesday, although concerns over the outlook for the global economy capped gains.

USA government data on Wednesday showed that domestic crude inventories rose by less than expected last week even as refineries hiked output. The government's official supply report is due out later on Wednesday.

"While Venezuela's output reportedly rose last month, fresh U.S. 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.

U.S. West Texas Intermediate (WTI) crude futures were at $53.74 per barrel at 0153 GMT, up 8 cents from their last settlement.

Treasury Secretary Steven Mnuchin said USA -imposed oil sanctions are putting pressure on the embattled Venezuelan President Nicolas Maduro, who the U.S.is trying to oust.

"It would seem that the market is really not too anxious yet about the potential loss of Venezuelan barrels", said analysts at JBC Energy in a report. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

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"The United States is now the number one producer of oil and natural gas anywhere in the world", Trump said during his State of the Union address to Congress.

"The market will struggle to compare disappointing API Inventory numbers against reports of a decrease in Venezuelan output, OPEC cuts, and weak economic data".

In December, lengthy Organization of the Petroleum Exporting Countries (OPEC) discussions finally came to a conclusion, resulting in a larger-than-expected production cut. Venezuela, an OPEC member, is like Iran and Libya exempt from making voluntary curbs under the deal.

USA energy firms last week cut the number of oil rigs operating to their lowest in eight months as some drillers followed through on plans to spend less on new wells this year. Brent hit 2019 highs of $63.63 on Monday before joining WTI in a zig-zag pattern.

"The collapse in oil prices late a year ago has resulted in more cautious spending by U.S. oil explorers", said Dhar. "Moreover, lower oil prices - prices were between 14% and 18% lower in January than their 2018 average - are likely to stimulate economic activity and oil demand, particularly in emerging markets", said Jean-Pierre Durante, Head of Applied Research at Pictet Wealth Management. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies. 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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