Oil Slides on Disappointing U.S

OPEC supply fell in January by the largest amount in two years

OPEC supply fell in January by the largest amount in two years

Brent crude futures dropped 24 cents, or 0.38 percent, to settle at $62.51 a barrel.

Crude futures earlier posted around two-month highs.

US West Texas Intermediate (WTI) futures were at $55.13 per barrel, down 13 cents, or 0.24 percent, from their last settlement. Numerous tankers are now in the water off the Venezuelan coast, unable to move because state-owned PDVSA is demanding payment, which would run afoul of USA sanctions.

Despite the slide, investors expect US sanctions on Venezuela and production cuts led by OPEC to head off a glut this year, buoying prices.

"Disappointing U.S. factory data sparked fresh concerns over a slowdown in the global economy, although losses were limited as OPEC cuts and U.S. sanctions on Venezuela continued to point to a tighter supply picture", Cantor Fitzgerald Europe said. "There's no sign of overhang in the crude oil markets".

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

Oil also felt pressure from a strengthening dollar, which rallied for a fourth straight session, which makes crude more expensive for non-U.S. buyers.

The European Union is considering imposing more sanctions on the government of Venezuelan President Nicolas Maduro but has not discussed an oil embargo, Malta's foreign minister said on Monday.

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Meanwhile, a Reuters survey found that supply from OPEC states had fallen the most in two years, with Saudi Arabia and its Gulf Arab allies over-delivering on pledged cuts while Iran, Libya and Venezuela registered involuntary declines.

Russian oil output declined to 11.38 million barrels per day (bpd) in January, or by around 35,000 bpd from the October 2018 level, the baseline for a global oil accord to curb production, missing the deal's target, Energy Ministry data showed on Saturday.

The U.S. sanctions on Venezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran past year, some analysts said after examining details announced by the government.

"The market seems to be turning on renewed worries that there doesn't seem to be a lot of progress on the U.S".

While OPEC and its allies are cutting output, the United States is expanding supply.

The main drag on prices has been concern about a possible slowdown in demand this year due to a weaker outlook for economic growth and developments such as the U.S.

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.

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