LONDON—Oil prices rose on Jan. 29 after Washington imposed sanctions on state-owned Venezuelan oil company PDVSA in a move likely to curb the OPEC member’s crude exports, but gains were capped by abundant supply and signs of a slowing Chinese economy.
The upward momentum in the global benchmarks gathered pace in afternoon trading. International Brent crude oil futures were up $1.31 at $61.24 a barrel by 8:38 CST and on track for its biggest monthly rise since April 2016.
U.S. West Texas Intermediate (WTI) crude futures were up $1.32 at $53.31.
Venezuela has the world’s biggest proven oil reserves, but its potential has not been realized fully because of a lack of investment. The country is also a member of OPEC, which is implementing a supply cut deal to shore up prices.
“The Latin American country is predominantly the producer of heavier crude, exactly what (U.S. Gulf) refiners are thirsty for,” PVM said in a note.
“They will now have to turn elsewhere (possibly to Mexico, Saudi Arabia and Iraq) to satisfy their needs for this type of crude, which would inevitably lead to a price spike.”
Venezuela’s exports fell to little more than 1 million barrels per day (bbl/d) in 2018 from 1.6 million bbl/d in 2017, according to Refinitiv ship-tracking data and trade sources.
The United States has been the biggest buyer of Venezuelan oil despite their political differences, taking about half of the country’s export volumes, followed by India and China.
Petromatrix estimated that Venezuelan exports will drop by about 500,000 bbl/d under current conditions.
Meanwhile, Libya’s biggest oilfield, El Sharara, will remain shut until departure of an armed group occupying the site, the head of National Oil Corp said.
However, global oil supply remains high, largely because of a more than 2 million bbl/d increase in U.S. crude oil production last year to a record 11.9 million bbl/d.
“(The) focus will be intensifying on the U.S. inventory data tomorrow, with expectations of a further build in stocks,” Cantor Fitzgerald Europe said in a note.
There are also concerns in the oil industry that crude demand could sputter.
Activity in China’s vast manufacturing sector is expected to shrink for the second straight month in January, a Reuters poll showed.
Warnings from Caterpillar and Nvidia on Jan. 28 about weakening demand from China have also concerned investors.
Danny Rice-led SPAC Completes $2 B NET Power Merger
2023-06-08 - Former Rice Energy Inc. CEO Danny Rice will now lead a power generation company, NET Power, backed by Occidental Petroleum, Baker Hughes, SK Group and other investors.
Ameresco, Atura Selected to Build Battery Storage System
2023-06-08 - Canada’s IESO expects Ontario’s energy storage capacity to increase dramatically as a partial result of the 250 MW system.
Asset Manager to Vote Against $18.8 B ONEOK-Magellan Deal
2023-06-08 - Asset manager Energy Income Partners says the taxes on ONEOK’s deal to buy Magellan Midstream Partners will exceed the premium offered by ONEOK or any potential benefits from a combination.
Bloom and Perenco Sign Solid Oxide Fuel Cell Storage Agreement
2023-06-07 - The agreement between Bloom Energy and Perenco marks the first deployment of Bloom’s fuel cell tech in the U.K.
ConocoPhillips to Raise Stake in Australia’s APLNG
2023-03-28 - ConocoPhillips currently holds a 47.5% stake in APLNG, one of the largest suppliers of natural gas to Australia’s East Coast. Origin and China’s Sinopec hold the remaining shares in APLNG.