Oil prices rose about 1 percent on Wednesday, boosted by signs of strong U.S. demand for distillate products and tightening global crude supply, but gains were capped by a rising USA dollar and ongoing concerns about a global economic slowdown, Trend reports citing Reuters. The WTI prices remained positive on Wednesday after the EIA inventory report joined hands with Venezuelan sanctions and supply outages at Canada and Mexico.
The Energy Information Administration (EIA) wind of the Department of Energy (DoE) released an increase of 1.3 million barrels into the crude stocks than market consensus of 2.18 million barrels.
U.S. West Texas Intermediate (WTI) crude futures gained 35 cents, or 0.65 percent, to settle at $54.01 a barrel, up from a session low of $52.86.
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Other than the inventory levels, comments from the Azerbaijan's oil minister that OPEC+ alliance needs to extend production cuts in order to support crude recovery also please the energy buyers.
The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran past year, experts said after examining details posted by the Treasury Department. "That said, if the other OPEC countries fail to offset this outage, the oil market could quickly become undersupplied, driving the price up".
Price support is provided by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) to tighten the market.
The producers known as OPEC+ started cutting production by 1.2 million barrels per day (bpd) from last month to avert a new supply glut, and OPEC has delivered nearly three quarters of its pledged cuts already, a Reuters survey showed last week. Venezuela, an OPEC member, is, like Iran and Libya, exempt from making voluntary curbs under the deal.
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Also dampening market sentiment still were worries about weaker global economic growth and the US-China trade dispute.
The oil price is showing a 20 percent gain so far this year.
US President Donald Trump last week said he would meet with Chinese President Xi Jinping, perhaps twice, in the coming weeks to try to seal a comprehensive trade deal with Beijing, but acknowledged it was not yet clear whether a deal could be reached. Prices are likely to remain rangebound, or drift sideways to lower until the US and China reach a trade deal.
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