Worldwide oil prices dip as United States crude inventories rise

Irving Hamilton
February 7, 2019

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. USA crude was down 48 cents at $53.18.

National Security Adviser John Bolton and Treasury Secretary Steven Mnuchin announce sanctions against Venezuela state-owned oil company PDVSA and embattled president Nicolas Maduro.

A flotilla loaded with about seven million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest US sanctions and others whose buyers are weighing whom to pay, according to traders, shippers and Refinitiv Eikon data.

The current OPEC+ deal to cut oil output remains the exclusive source of support for oil prices, while United States sanctions against Venezuelan and Iranian oil exports and the so-called "Saudi Put" are also limiting occasional dips somewhat.

"It would seem that the market is really not too anxious yet about the potential loss of Venezuelan barrels", analysts at JBC Energy wrote.

"This is either because the market assumes that the size of the impact will not be large, or at least it will be of short enough duration".

Global economic worries have weighed on market sentiment in recent days, offsetting support from signs that global supplies are tightening. -China trade dispute. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

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“With higher production from non-OPEC producers, especially the US, over the last few years, OPEC's market share has been shrinking, ” said James Williams, energy economist at WTRG Economics.

Senior U.S. and Chinese officials are poised to start another round of trade talks next week.

The Organisation of the Petroleum Exporting Countries and its allies, including Russian Federation, agreed to production cuts effective from last month to beat back supply growth.

Saudi Arabia and its Gulf allies over-delivered on the group's supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines.

"The price has yet to react in any noticeable way", he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. 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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