Rising concerns about tightening crude supply due to turmoil in Venezuela helped boost oil prices on Friday, but an increase in the US oil rig count capped gains.  BP photo.

Oil prices up 1 per cent Friday

Oil prices climbed slightly on Friday on rising political turmoil in Venezuela which threatens crude supply, however, rising US fuel stocks and concern over slowing global economic growth capped gains.

By 2:38 p.m., EST, benchmark Brent crude futures 66 cents to $61.75/barrel.  Since beginning of trading on Monday, Brent is down about 2 per cent.  US West Texas Intermediate futures climbed 58 cents to $53.71/barrel.  WTI is set to decline 0.3 per cent for the week, the first decline in four weeks.

The Trump administration hinted it may impose sanctions on Venezuelan crude exports.  This week, Washington said it recognized Juan Guaido as interim president, which spurred President Nicolas Maduro to cut ties with the United States.

According to RBC Europe, US sanctions on Venezuela’s oil exports could nearly double the already projected shortfalls of crude from the South American country.

“Venezuelan production will decline by an additional 300,000-500,000 barrels per day (b/d) this year, but such punitive measures could expand that outage by several hundred thousand barrels,” said the bank.

According to Reuters, some analysts say the possibility of immediate sanctions is unlikely.

“We view a blockade on Venezuelan imports as low probability and a last resort measure that is likely weeks if not months away should it materialize,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Rittersbusch added “the evolving situation in Venezuela appears capable of delaying our expected test of $50 support”.

The ongoing US-China trade dispute put a damper on the market, casting doubt over world economic growth expectations and thwarting oil price gains.  Last year, growth in China hit its lowest level in 30 years.

Hundreds of economists worldwide who participated in a poll by Reuters say a synchronized global economic slowdown is underway and will only deepen if the US-China trade war escalates.

As well, rising US crude production is another reason for stagnating oil prices.  US fuel stocks and crude inventories were up by 8 million barrels last week, according to US EIA data.

Reuters reports that gasoline refining profits are falling worldwide as consumption stalls at the same time as supply is growing.  There are record setting inventories in Asia, America and Europe.

In the US, gasoline margins weighed down by slowing demand and rising supply fell to $5.70 per barrel on Thursday, the lowest seasonally since 2009.

Barclays said in a note that it is cutting its forecast for 2019 Brent prices from $72/barrel to $70/barrel.