HOUSTON: Oil prices rose on Wednesday, buoyed by government data showing US crude oil and fuel inventories fell last week and by mounting concerns about tighter global supply following the US threat of tariffs on nations buying Venezuelan crude.
Brent crude futures gained 88 cents, or 1.21%, to $73.90 a barrel by 10:42 a.m. ET (1442 GMT), their highest since February 27. US West Texas Intermediate crude futures rose 94 cents, or 1.36%, to $69.94 a barrel.
US crude stocks, gasoline and distillate inventories fell last week, the US Energy Information Administration said on Wednesday. Crude inventories fell by 3.3 million barrels to 433.6 million barrels in the week ended March 21, the EIA said, a deeper draw than the 956,000 barrels that analysts had expected in a Reuters poll.
Meanwhile, trade in Venezuelan oil to top buyer China stalled on Tuesday after US President Donald Trump threatened tariffs on countries buying from Caracas, days after US sanctions targeting China’s imports from Iran.
On Monday, Trump signed an executive order authorizing blanket 25% tariffs on imports from any country that buys Venezuelan crude oil and liquid fuels. “The discount on Venezuela’s exports could go up to 35%, and difficulties in commercialization could generate bottlenecks that could lead to production shutdowns amounting up to 400,000 barrels per day, more than half of Venezuela’s exports,” said Barclays analysts in a note.
Venezuela could potentially lose $4.9 billion in revenue, or over 10% of GDP, the analysts said. Oil is Venezuela’s main export, and China is already a target of US import tariffs. Chinese traders and refiners said they were waiting to see whether Beijing would direct them to stop buying. “Physical markets are tightening as flows are shifted due to the raft of US sanctions,” said Ashley Kelty, analyst at Panmure Liberum.
Last week Washington also imposed a new round of sanctions on Iran’s oil sales, targeting entities including Shouguang Luqing Petrochemical, an independent refinery in China’s Shandong province, and vessels that supplied oil to such plants.
Comments
Comments are closed for this article.