Global slowdown worries keep oil prices under pressure

Global slowdown worries keep oil prices under pressure

USA oil prices rose by 1 percent on Thursday, boosted by the US threat of sanctions on Venezuela, but gains were capped by record high gasoline inventories and an unexpected big build in crude stocks in the United States.

U.S. West Texas Intermediate crude futures were at $53.70 per barrel, up 57 cents.

The supply of global oil is also being closely watched by oil market analysts with the growth in production of USA shale oil also a pressure on prices. On Wednesday, Venezuelan opposition leader Juan Guaido declared himself interim president on Wednesday, winning over the backing of the Washington and many Latin American nations and prompting socialist incumbent Nicolas Maduro to break relations with the U.S.

Oil had earlier hit $61.38 after the United States said it could impose sanctions on Venezuela's crude exports as Caracas descends further into political and economic turmoil.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said USA crude inventories rose by 5.4 million barrels in the week to November 30, to 448 million barrels, in a sign that US oil markets are in a growing glut.

The EIA data is due out later on Thursday, after Wednesday's release by the American Petroleum Institute saying US crude stocks rose by 6.6 million barrels in the latest week, versus expectations for a fall of 42,000 barrels.

The oil-sands industry has been ramping up shipments of crude by rail at a breakneck pace, with individual producers striking deals to load more oil on trains and Alberta's government buying rail cars to increase capacity.

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A sudden escalation in long-burning tensions between the United States and Venezuela could have far-reaching ramifications in the oil market, where the Bolivarian Republic remains a significant player despite its plunging output.

'This lower oil price environment may give Trump more cushion to implement these sanctions. It has also held off on blocking exports of US -origin diluents, which Venezuela needs to dilute its heavy oil. If the Trump administration pulls the trigger on energy sanctions, those declines could balloon to several hundred thousand more barrels, says Helima Croft, global head of commodity strategy at RBC.

After Maduro broke off relations with the USA, the US threatened to impose sanctions on Venezuelan oil.

The global benchmark crude has dropped 2 percent over the week.

"The crude quality mismatch will grow even bigger", Paola Rodriguez-Masiu, an analyst at Rystad Energy, said Thursday in a report.

Meanwhile, world leaders and top executives are meeting in Davos, Switzerland, this week to discuss how to steer policy amid worries of slowing economic growth, damaging trade wars and Brexit.

"The road back for Venezuela will be extremely arduous given the depths of the economic and humanitarian disaster", she said.

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