The curious phenomenon of concerns over economic growth being softened somewhat by the prospect of tighter supply due to Venezuela repeated itself on Monday within the crude trading community, as West Texas Intermediate fell 70 cents to $54.56 per barrel and Brent dropping 24 cents to $62.51 per barrel.
However, Russian oil output in January missed the target for the output cuts, Energy Ministry data showed on Saturday.
Crude oil prices had shot up by 7% within a week of the U.S. declaring sanctions on Venezuela on Jan 28.
When asked about how European and Asian customers could be convinced to buy oil from Venezuela, risking sanctions from Washington, he stated that now, Washington's sanctions apply only to U.S. entities.
As per the American Petroleum Institute, the WTI stockpile stock increased by 2.5 million barrels last week.
Crude futures earlier posted around two-month highs.
Prices of the barrel of WTI are shedding around $3 since Monday's new YTD peaks near $55.60 amidst the re-emergence of speculations over a slowdown in global demand.
Market participants have focused on signs of tightening global crude supply after the Organization of the Petroleum Exporting Countries (OPEC) and allies began an agreement in January to cut output.
Echoing the view, Sukrit Vijayakar of Trifecta Consultants added that prices are unlikely to spike as the U.S. does not want crude oil prices to rise and as shale producers respond to the price rise by pumping more.
Venezuela's opposition is opening a US fund to receive the proceeds of oil sales, a key measure to secure revenue for its effort to dislodge Maduro, an opposition lawmaker said on Wednesday. -China trade talks and the unexpected sanctions on Venezuelan oil have been the biggest influences on prices over the short-run.
Looking ahead, the EIA will also report on U.S. crude oil inventories later in the NA session along with extra publications in the United States docket.
The oil market has also been aided by a slight pick-up in risk sentiment over the last month as US-China trade tensions are dialled down a touch.
"The market seems to be turning on renewed worries that there doesn't seem to be a lot of progress on the U.S". US Treasury Secretary Steven Mnuchin told reporters that by blocking PDVSA's assets, the United States was preserving the assets of the company in the interests of the people of Venezuela and also protecting its own market.
U.S. President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the dispute.
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