Oil prices edged up on Friday as turmoil in Venezuela increased the chances of tighter global supply if the U.S. makes good on signals that it could impose sanctions on Venezuelan exports.
However, fresh data on surging U.S. fuel stocks and worries about U.S.-China trade talks weighed on prices.
Brent crude oil futures were at $61.17 a barrel at 0955 GMT, up 8 cents, or 0.13 per cent.
Earlier on Friday, the international benchmark crude rose as high as $61.92.
Brent has shed about 2.4 per cent since the start of trade on Monday and is on track to post its first week of losses in four weeks.
U.S. West Texas Intermediate (WTI) crude futures were at $53.34 per barrel, up 21 cents, or 0.4 per cent.
Amid violent street protests, Venezuela’s opposition leader, Juan Guaido, declared himself interim president, winning recognition from Washington and parts of Latin America.
Nicolas Maduro, the country’s leader since 2013, responded by breaking relations with the U.S.
“The oil market is partially pricing in the risk to Venezuela’s crude production, which has been plummeting in recent years,” Vandana Hari of Vanda Insights said.
RBC Europe predicted that sanctions could nearly double projected output shortfalls from the troubled exporter.
“Venezuelan production will decline by an additional 300,000-500,000 barrels per day (bpd) this year but such punitive measures could expand that outage by several hundred thousand barrels.’’
Global oil markets are still well supplied, however, thanks in part to surging output in the U.S.
Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain’s Barclays said in a note.
The bank cut its 2019 average Brent forecast to $70 a barrel, from $72 previously.
The output surge has swollen U.S. fuel stocks, and crude inventories rose by eight million barrels earlier, according to official data released on Thursday.
Earnings lift Wall Street, but demand may start to stutter because of a global economic slowdown, which is likely to dent fuel consumption.
A trade dispute between the U.S., China and tightening financial conditions around the world have hurt manufacturing activities in most economies and dragged China’s growth in 2018 to the weakest in nearly 30 years. (Reuters/NAN)