Oil prices experienced gains on Thursday following President Trump’s revocation of Chevron’s license to operate in Venezuela, which may tighten global crude supply. Brent crude rose 0.3%, while WTI gained 0.2%. The market continues to react to geopolitical tensions and changing U.S. fuel inventories, while analysts note that recent sales have likely reached a limit.
On Thursday, oil prices saw modest increases following U.S. President Donald Trump’s decision to revoke a crucial license for Chevron, thereby restricting its operations in Venezuela. Brent crude futures climbed by $0.19, or 0.3%, to reach $72.72 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by $0.16, or 0.2%, settling at $68.78 per barrel. This uptick came after both benchmarks had recorded their lowest values since December 10 due to excess U.S. fuel inventories and optimism regarding potential peace negotiations between Russia and Ukraine.
Trump’s recent announcement stopped Chevron from exporting 240,000 barrels per day from Venezuela, representing over 25% of the country’s oil production. This significant supply disruption has caused a reevaluation among traders, particularly amid the backdrop of ongoing discussions about a ceasefire between Russia and Ukraine. Industry expert Hiroyuki Kikukawa from NS Trading noted, “The Venezuela news triggered some unwinding of recent sell-offs,” emphasizing the market’s sensitivity to geopolitical developments.
Additional support for oil prices stems from prospects of future U.S. Strategic Petroleum Reserve purchases. Trump has previously criticized the Biden administration’s choice to draw from the Strategic Reserve to alleviate gasoline prices, placing further investor focus on market dynamics. The upcoming visit of Ukrainian President Volodymyr Zelenskiy to Washington for a rare earth minerals agreement also highlights geopolitical concerns central to current oil market trends.
U.S. crude inventories unexpectedly declined last week; however, gasoline and distillate levels increased, aligning with seasonal residential shifts in demand. Kikukawa remarked that the previous sell-offs linked to the burgeoning fuel inventories seem to have run their course as demand transitions towards gasoline. Meanwhile, Goldman Sachs reiterated its Brent crude baseline range of $70-85, attributing it to the U.S. administration’s strategies for maintaining commodity market dominance and affordability.
In conclusion, the recent fluctuations in oil prices are heavily influenced by geopolitical maneuvering, particularly in relation to U.S. sanctions on Venezuela and the ongoing conflict between Russia and Ukraine. Trump’s revocation of Chevron’s license may limit supply, while strategic moves by the U.S. administration aim to stabilize the market. Market experts suggest cautious optimism, given the potential for future inventory adjustments and geopolitical developments.
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