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Oil pushed up by deepening OPEC cuts, sanctions on Venezuela

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - rose on Wednesday as producer club OPEC said it had cut supply deeply in January and as U.S. sanctions hit Venezuela's

U.S. Intermediate (WTI) were at $53.52 per barrel at 0752 GMT, up 42 cents, or 0.8 percent, from their last close.

U.S. prices were also supported by a report from the (API) on Tuesday showing that crude inventories fell by 998,000 barrels in the week to Feb. 8 to 447.2 million, compared with expectations for an increase of 2.7 million barrels.

International Brent crude futures were up 0.8 percent, or 52 cents, at $62.94 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC), which de-facto leads as the world's top crude oil exporter, said on Tuesday that it had cut its output by almost 800,000 bpd in January to 30.81 million bpd.

Supply issues in OPEC-member are also bolstering as the South American country suffers a political and economic crisis, with introducing petroleum export sanctions against firm

Despite the political rifts between and the United States, U.S. refiners have in the past been some of the biggest buyers of Venezuelan crude.

These customers have fallen away after imposed sanctions earlier this year.

"With so far no sign of change in government, we see increasing risks that production losses could be larger and sooner than our forecast for a 0.33 million-bpd supply loss in 2019," U.S. said in a note on Wednesday.

has tried to find alternative customers, especially in Asia, but under U.S. pressure many buyers there are also shying away from dealing with

"Oil production is rapidly falling and companies that normally resell Venezuelan crude have not found ways to mitigate the effect of the U.S. sanctions," said.

WEAKENING DEMAND

Despite the OPEC cuts and crisis in Venezuela, analysts said global remain well supplied, while demand may be hit by an economic slowdown.

OPEC on Tuesday cut its forecast for 2019 world economic growth by 0.2 percentage point to 3.3 percent, highlighting headwinds such as a slowdown in global trade.

"continue to focus at the macro level on the dual notions of adequate supply and softening demand," Frank Verrastro, at the and International Studies (CSIS), a U.S. think-tank, said in a note.

He added that markets were amply supplied due to "adequate global oil inventories, the prospect of weakened demand tied both to U.S.-trade and broader economic concerns, the approach of seasonal refinery maintenance - when declines - and an influx of new supply from the and elsewhere".

Most new supply is coming from the United States, where crude production rose by more than 2 million bpd last year to a record 11.9 million bpd, making the country the world's biggest ahead of and

And while OPEC and its allies, including Russia, withhold supply, U.S. output is expected to rise further, with the saying on Tuesday that U.S. crude production is expected to reach 13.2 million bpd by 2020.

(Reporting by Gloystein; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 13 2019. 13:30 IST
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