Oil prices slip on Wednesday reversing earlier gains
Oil prices declined on Wednesday, reversing earlier gains, as further disruptions to Venezuela’s crude exports were offset by a report that U.S. inventories rose last week.
Brent crude futures were down 22 cents, or 0.32 percent, to $67.75 a barrel at 1021 GMT. U.S. crude futures were down 44 cents at $59.50 a barrel.
Venezuela’s main oil export port of Jose and its four crude upgraders were unable to resume operations following a massive power blackout on Monday, the second in a month.
Crude exports from the key OPEC member have dropped sharply since Washington in January banned U.S. refiners from buying Venezuelan oil.
Oil prices have risen more than 25 percent this year, supported by supply curbs by the Organization of the Petroleum Exporting Countries and other major producers, along with U.S. sanctions on exports from Venezuela and Iran.
“Yo-yo price swings have become the norm in the oil market,” PVM analyst Stephen Brennock said in a note. “Market focus switched back to supportive supply considerations. They include, most notably, Venezuela’s deepening oil woes.”
In the short term, prices were pressured by a report from the American Petroleum Institute, a trade organization, saying U.S. crude inventories rose 1.9 million barrels last week, while analysts had forecast a 1.2 million barrel-drop.
The Department of Energy (DoE) will release official weekly figures later on Wednesday.[EIA/S]
Brent crude traded in a relatively narrow range of $64 to $69 a barrel throughout March, reflecting the tension between tightening supplies and concerns over global demand.
“We seem to have reached a state of equilibrium after the recent headline-driven choppy trading, and we need to see some new impetus for price direction,” said Jeff Halley, senior market analyst at OANDA in Singapore.
At the same time, disruptions in the United States have also lent support.
The U.S. Coast Guard on Monday reopened portions of the Houston Ship Channel with restrictions on waterways affected by a petrochemical leak and fire outside Houston that have disrupted ship traffic.
The disruptions to transport and refining operations will weigh heavily on U.S. inventories, Stephen Schork, editor of Pennsylvania-based The Schork Report, said in a note.
Also, crude flows from two key shale basins to the Cushing, Oklahoma delivery point for U.S. crude futures slowed in March due to winter production outages, dealers said.
Hedge funds and other money managers have increased bets that demand for oil will be sustained, even as the market rallied last week.