Oil prices rose on Wednesday after data from the US Energy Information Administration showed US crude stocks rose less than expected last week due to a decline in imports.  Equinor photo.

US oil prices up over 1 per cent

Oil prices rose on Wednesday after data from the US Energy Information Administration showed crude stockpiles in the US grew less than expected and market concerns grew about crude supply in the wake of the imposition of US sanctions on Venezuela’s oil industry.

By 2:44 p.m., EST, US crude futures had climbed 96 cents to $54.27/barrel, a 1.8 per cent gain.  Brent crude futures rose 31 cents to $61.51/barrel.

According to the US EIA, crude oil inventories rose by 919,000 barrels last week, less than anticipated due to a decline in imports.  Analysts polled prior to the release of the data expected US crude stocks to grow by 3.2 million barrels.

Gasoline inventories dropped by 2.2 million barrels from record highs as refiners slowed down their production.  Analysts had predicted an increase of 1.9 million barrels when polled by Reuters before the release of the EIA data.

“Because we had a huge drop in gasoline inventories, that gave a bullish tint to the entire report,” Phil Flynn, an analyst at Price Futures Group told Reuters.

Oil prices have been buoyed by the Trump administration’s announcement on Monday that it is imposing export sanctions on Venezuelan crude.  The sanctions are meant to freeze PDVSA’s approximately 500,000 barrels per day in crude exports.

Under the sanctions, United States companies can purchase Venezuelan crude, but the cash would be put into a “blocked account”.   Such an arrangement means PDVSA will likely look for other crude buyers.

The US sanctions are aimed at driving President Nicolas Maduro from power.  Maduro’s government has been at the helm during the country’s economic collapse and social crisis that has forced millions of Venezuelans to flee their country.

The United States and a number of its allies are calling the country’s most recent election fraudulent.

Meanwhile traders who sell Venezuelan crude to the US are looking for new buyers, according to Reuters’ sources.  US refiners are also looking for other sources of heavy crude.

Despite the sanctions, Carsten Menke at Julius Baer told Reuters “this oil will find its way to market”.

Gains in oil prices were limited by market concerns over the slowing global economy and the ongoing trade war between the US and China which has seen the two economic superpowers slap tariffs on each other’s goods.

Last week, China reported its lowest annual economic growth in nearly 30 years.

Officials from the two countries are set to begin a new round of trade talks on Wednesday.