Oil prices rose on news of Trump’s cancellation of Chevron’s Venezuela license, impacting supply. Brent crude gained 19 cents to $72.72 per barrel, and WTI climbed 16 cents to $68.78. This move comes amid recent low prices and increasing U.S. fuel inventories, as market attention shifts to ongoing geopolitical developments and strategic reserve dynamics.
Oil prices experienced a modest rebound on Thursday after U.S. President Donald Trump revoked Chevron’s operating license in Venezuela, a decision that could restrict crude supply further. Brent crude oil futures rose by 19 cents, reaching $72.72 per barrel, while U.S. West Texas Intermediate crude futures increased by 16 cents to $68.78 per barrel. Both crude benchmarks had previously hit their lowest levels since December 10, largely due to an unforeseen increase in U.S. fuel inventories suggesting weakening demand, coupled with ongoing negotiations for peace between Russia and Ukraine.
Trump’s decision reverses a license that his predecessor, Joe Biden, had granted to Chevron over two years ago, which allowed the company to export approximately 240,000 barrels of crude oil per day from Venezuela, accounting for over a quarter of the nation’s oil output. The suspension of this license means Chevron can no longer export crude oil from Venezuela, tightening market supplies.
Hiroyuki Kikukawa, president of NS Trading, commented, “The Venezuela news triggered unwinding after the recent sell-off amid Russian-Ukraine ceasefire talks.” Additionally, Kikukawa noted that potential purchases from the U.S. Strategic Petroleum Reserve supported the market as WTI prices were hovering near their lowest point in over two months.
The administration’s commitment to replenish the Strategic Petroleum Reserve, which Trump emphasized last week, counters the actions of his predecessor aimed directly at alleviating gasoline prices. Investors’ focus extends beyond the oil policy to the upcoming signing between Trump and Ukrainian President Volodymyr Zelenskiy regarding rare earth minerals, which could impact U.S. aid and relations in the region.
Unexpectedly, U.S. crude oil inventories fell last week as refining activity increased. However, both gasoline and distillate inventories rose, according to data from the Energy Information Administration. “Since this is a seasonal off-peak period, with demand shifting from kerosene to gasoline, the sell-off driven by rising product inventories has likely run its course,” observed Kikukawa.
Goldman Sachs further published a note indicating that the U.S. government’s objective to achieve commodity dominance while ensuring affordability supports their Brent price forecast range of $70 to $85 per barrel, a scenario favorable for robust growth in U.S. supply.
In summary, oil prices have begun to recover from two-month lows following Trump’s decision to end Chevron’s operating license in Venezuela, which may constrict supply. Despite a surprise increase in U.S. oil inventories hinting at lower demand, activity in refining and strategic market decisions indicate a complex interplay of factors affecting future price movements. Goldman Sachs’ outlook aligns with expectations of stable prices supporting U.S. supply growth.
Original Source: www.tradingview.com
