Oil steadies as investors weigh up odds of global supply squeeze

OPEC supply fell in January by the largest amount in two years

OPEC supply fell in January by the largest amount in two years

Average weekly crude oil production remained at the record 11.9 million barrels per day (bpd) it reached in late 2018.

Citgo, the eighth-largest US refiner and Venezuela's top foreign asset, is in the middle of a tug of war as the Trump administration has made aggressive moves to remove it from Maduro's control.

The oil price also came under pressure as weekly data published by the U.S. Energy Information Administration on Wednesday showed an unwelcome increase in stocks of crude oil.

"WTI and Brent crude oil both remain rangebound following a failed attempt to move higher", said Ole Hansen, head of commodity strategy at Saxo Bank. Brent reached $63.63 a barrel, the highest since December 7, while WTI climbed to $55.75 a barrel, the strongest since November 21.

Meanwhile, oil supply from the Organization of the Petroleum Exporting Countries fell in January by the largest amount in two years, a Reuters survey found, as Saudi Arabia and its Gulf allies over-delivered on the group's supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines.

OPEC oil supply fell in January by the largest amount in two years despite sluggish production declines from Russian Federation, according to a Reuters survey.

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"While Venezuela's output reportedly rose last month, fresh United States sanctions on the country could see 0.5 to 1 percent of global supply curtailed", said Vivek Dhar, commodities analyst for Commonwealth Bank of Australia in a note on Monday.

Venezuela, which produced 1.15 million barrels per day in December, was forced to look for alternative clients for its crude oil following sanctions that prevent the state oil company PDVSA from exporting to the USA unless the revenues are paid to opposition leader Juan Guaido. The sanctions aim to block USA refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro. A week earlier, inventories recorded a 1.1-million-barrel decline and production averaged 5 million bpd.

Market participants are also watching for developments surrounding the U.S.

Worries about weaker global economic growth and the U.S. -China trade deal. An economic slowdown in the Euro Zone is now a concerns after German industrial output unexpectedly fell in December for the fourth consecutive month.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a delegation to Beijing next week to lay the groundwork for a meeting between Presidents Donald Trump and Xi Jinping later this month.

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