USA oil prices edge up as market eyes tighter supply

Daily March WTI Crude Oil

Daily March WTI Crude Oil

Futures held lower after the close, when the American Petroleum Institute said USA crude stocks rose by 2.5 million barrels last week, more than analyst expectations.

The oil industry generally believes the curbs will help to balance the market in 2019.

"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.

Futures on United States and global benchmarks, West Texas Intermediate (WTI) and Brent crude, rose to the highest level since late November 2018.

At 10:49 GMT, March WTI crude oil is trading $55.11, up $0.55 or +1.03% and April Brent crude oil is at $62.97, up $0.46 or +0.74%.

Crude futures earlier posted around two-month highs. These factors have helped lift the price from a low of $42.95 in late December to its current level around $55.30 per barrel - not far from the 2-1/2 month high reached Monday.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies began a new round of supply cuts in January.

The impact of OPEC+'s supply curbs has been boosted by USA sanctions on Venezuelan state-owned oil firm PDVSA.

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"While Venezuela's output reportedly rose last month, fresh U.S. sanctions on the country could see 0.5 to 1 percent of global supply curtailed", said Vivek Dhar, commodities analyst for Commonwealth Bank of Australia in a note on Monday.

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

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.

While OPEC and allied producers are slashing their output in an attempt to boost crude prices, which saw a rapid fall previous year, the U.S. has been opposing the measure and vowed to continue expanding its supply.

Market participants are also watching for developments surrounding the U.S.

Concerns about the pace of global economic growth were fanned by a weak start for the year for euro zone businesses.

"The market seems to be turning on renewed worries that there doesn't seem to be a lot of progress on the U.S. -China trade talks", said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

U.S. President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the dispute.

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