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International oil prices dip as US crude inventories rise

File photo of a maze of crude oil pipes and valves. Photograph:( Reuters )

Reuters Singapore Feb 07, 2019, 12.18 PM (IST)

Oil prices slipped on Thursday after US crude inventories rose and the country's production held at record levels, but OPEC-led supply cuts and Washington's sanctions against Venezuela supported markets.

US West Texas Intermediate (WTI) crude futures were at $53.82 per barrel at 0607 GMT, down 19 cents, or 0.4 per cent, from their last settlement.

International Brent crude oil futures fell 25 cents, or 0.4 per cent, to $62.44 per barrel.

US crude oil inventories climbed by 1.3 million barrels in the week that ended February 1 to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.

Meanwhile, average weekly US crude oil production remained at the record 11.9 million barrels per day (bpd) it reached in late 2018. The United States is currently the world's largest oil producer, ahead of traditional top suppliers Russia and Saudi Arabia.

Countering the rising US crude output and inventories are voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market and propping up prices.

"The key supply story remains the ongoing OPEC production cuts," US bank Goldman Sachs said on Wednesday.

Meanwhile, US sanctions against Venezuela's oil industry are expected to freeze sales proceeds of Venezuelan crude exports to the United States.

"Around a third of Venezuela's exports head to the US as such, we expect Venezuelan exports to quickly fall by 300,000 barrels per day (bpd) to around 700,000 bpd," ANZ bank said on Thursday.

"The risks are rising that this political standoff will deepen the fall in output as funds dry up and the mass defection of workers accelerates," it added.

Washington said last week that after April 28 foreign companies will not be able to conduct business with PDVSA using the US financial system, effectively banning them from paying in US dollars.

"The ban ... dramatically ramps up the sanctions to a global level and could potentially result in a loss of most Venezuelan output," French bank Societe Generale said in a note published on Wednesday.

Story highlights

Average weekly US crude oil production remained at the record 11.9 million barrels per day ( bpd ) it reached in late 2018. The United States is currently the world's largest oil producer, ahead of traditional top suppliers Russia and Saudi Arabia.