Oil Price Fundamental Daily Forecast – Markets On-Edge Due to Turmoil in Venezuela

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday amid concerns that the political turmoil in Venezuela could lead to a disruption in supply. According to reports on Thursday, the Trump administration signaled it could impose sanctions on Venezuela’s crude exports. This is potentially bullish for crude oil prices because it comes on top of the sanctions against Iran that have already limited supply, and the OPEC-led supply cuts that have been underpinning the market since late December and most of January.

At 0833 GMT, March WTI crude oil futures are trading $53.63, up $0.50 or +0.91%. March Brent crude oil is at $61.47, up $0.38 or +0.62%.

U.S. Energy Information Administration Weekly Inventories Report

According to the EIA, U.S. crude inventories surprisingly surged last week, however, trader reaction was muted due to concerns over Venezuela. The data showed that crude oil inventories rose by 7.97 million barrels during the week-ending January 18. Traders were looking for a draw of about 200,000.

Gasoline inventories also rose by 4.05 million barrels versus a forecast for a build of 2.66 million barrels. This was the eighth consecutive week of increases. Distillate stockpiles decreased by 0.62 million barrels, compared to estimates for a decline of 0.23 million.

Forecast

Speculative buyers are in control early Friday in anticipation of an escalation of the economic and political turmoil in Venezuela. The issues in the country have also put Washington and Moscow on edge with Russia warning the United States not to intervene.

So far the response by WTI and Brent crude oil traders has been on the light but firm side. This may be because Venezuela is a small player in the oil game. Nonetheless, it comes at a time when traders are watching supply so there are added concerns.

WTI short-sellers could get agitated if buyers can take out $54.98. Brent short-sellers are defending $62.99. This is the trigger point for an upside breakout.