Oil ticks higher, market eyes US State of the Union address

Irving Hamilton
February 7, 2019

"We expect the oil price to rise in the first-half of 2019 on tightening supply conditions and decline in the second-half on weakening economic activity and an increase in USA crude exports to worldwide markets", said French bank BNP Paribas.

An oil pumpjack and a tank with the corporate logo of state oil company PDVSA are seen in an oil facility in Lagunillas, Venezuela January 29, 2019.

The Organisation of the Petroleum Exporting Countries, Russia and other non-OPEC producers - an alliance known as OPEC+ - agreed in December to reduce supply by 1.2 million bpd from January 1.

The Bloomberg Dollar Spot index has risen 1 percent this month, capping gains in crude and other commodities priced in the currency.

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

Weighing on oil markets, USA government data showed new orders for US -made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.

The daily trend is up for both WTI and Brent crude oil, however, momentum is starting to shift to the downside.

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"The collapse in oil prices late previous year has resulted in more cautious spending by United States oil explorers", said Dhar.

However, U.S. crude stocks rose last week even as refineries boosted output, while gasoline and distillate stocks increased, data from industry group the American Petroleum Institute showed on Tuesday. OPEC supply fell last month by the largest amount in two years, a Reuters survey last week found.

US crude inventories rose by 2.5 million barrels last week and gasoline stocks also increased, the American Petroleum Institute said.

Russian Energy Minister Alexander Novak has said the country's overall cuts from the October baseline would total 50,000 bpd in January.

"The other practical problem is that, given the sanctions, we should no longer manage Venezuela from the United States. but from Europe", the manager said, noting that Total of course will be complying with the USA sanctions and has put its Venezuelan operations in a "hibernation mode". The sanctions aim to block USA refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro.

The U.S. has struck the "right balance" to meet U.S. market needs and all options and "are on the table" going forward, Mnuchin told reporters outside the White House.

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

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