Oil prices rose in Asian trade on Thursday, but trimmed some of their intraday gains following a Wall Street Journal report that the U.S. was planning to control Venezuelan oil for the long term.
Prices found some relief after tumbling for two straight sessions, amid concerns that a global supply glut will be accentuated by increased production in Venezuela.
Data showing a bigger-than-expected weekly draw in U.S. oil inventories also aided crude prices, while continued hostilities between Russia and Ukraine also kept some risk premium in play.
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Brent oil futures for March rose 0.5% to $60.24 a barrel, while West Texas Intermediate crude futures rose 0.5% to $56.17 a barrel by 23:01 ET (04:01 GMT). Both benchmarks slumped over 1% apiece for two consecutive sessions.
Trump plans years-long control of Venezuela oil, targets $50/barrel oil
Trump is planning an initiative to control the Venezuelan oil industry for several years to come, a WSJ report said, in a bid to achieve the president’s $50 a barrel oil price target.
The Trump administration is considering controlling Venezuela’s state-run oil company, Petróleos de Venezuela SA, or PdVSA, the report said.
Trump said on Tuesday that Venezuela will turn over between 30 million and 50 million barrels of oil to Washington, worth as much as $3 billion, just days after U.S. forces captured Venezuelan President Nicolas Maduro.
Trump was seen inviting a host of U.S. oil companies to set up production in Venezuela, with Chevron Corp (NYSE:CVX) seen at the forefront of this effort. Reuters reported that Chevron was negotiating an expansion in its license to operate in the Latin American country.
The company is currently the only U.S. oil major with operations in Venezuela, and has special government authorization that exempts it from strict sanctions against the country.
Markets fear that a sharp increase in Venezuelan production will further boost global supplies. Such a notion comes amid sustained concerns over an oil supply glut in 2026.
But analysts said that any increase in Venezuelan supplies was likely to take time, given the heightened political instability in the country after the U.S. incursion.
A report from the Financial Times said U.S. oil companies were seeking “serious guarantees” from Washington before they invested in Venezuela.
US oil inventories shrink more than expected
Government data released on Wednesday showed U.S. oil inventories shrinking by 3.8 million barrels in the week to January 2, more than expectations for a 1.2 million barrel draw.
The draw was also nearly twice the 1.9 mb draw seen in the prior week, and helped spur some confidence that demand in the world’s biggest fuel consumer remained strong.
Focus this week is on a host of key U.S. economic prints, most notably nonfarm payrolls data for December, due on Friday. The print is likely to factor into expectations for interest rates.
Source: Investing