Barclays cuts 2019 Brent oil price forecasts

Barclays cuts 2019 Brent oil price forecasts

USA crude oil futures gained 24 cents to $52.86 a barrel as of 11:24 a.m. EST (1624 GMT), while Brent lost 18 cents to $60.96 a barrel.

Helima Croft, global head of commodity strategy at RBC, noted that though Venezuela would have other nations to supply oil to in the wake of oil sanctions, the nation is the most dependent on U.S. cash.

The U.S. government could lessen the blow by phasing in restrictions on Venezuelan oil imports in a way that mirrors the trend U.S. refineries have already always been adjusting to, said John Auers, executive vice president of the refining consultancy Turner, Mason & Company. The only countries that sent more crude to the United States were Canada, Saudi Arabia and Mexico.

Venezuelan President, Nicolas Maduro, has struck back against his opponents, winning strong support from the country's armed forces and the solid backing of Russian Federation, which warned the United States not to intervene. Rail-car loadings hit a record 356,000 barrels a day in the week ended January 11, according to Genscape Inc.

The oil price maintained its new year strength as American geopolitical issues came to the fore in the shape of sanctions against Venezuela. USA total oil products exports over the past four weeks averaged about 5.2 million barrels per day, 140,750 barrels per day more than the same four-week period previous year.

More broadly, the slide in USA oil followed a tumble in global stock markets on Tuesday, with investors anxious about the threat of a widespread economic slowdown. The European Union was set to launch a mechanism that would facilitate non-dollar trade with Iran, skirting the USA sanctions, Reuters quoted diplomats as saying. They'll have to find heavy crude elsewhere.

There's plenty of oil on the market, but traders are nervous.

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On October 9, 2018, renowned American media house "Bloomberg" had reported: "Venezuela's annual inflation rate will surge to 1.37 million percent by the end of the year as the government fails to cover a widening budget shortfall by printing money, according to a report from the International Monetary Fund (IMF)". Gulf Coast refineries depended on Venezuelan heavy crude for about a quarter of its imports, according to data from the EIA.

The oil-sands industry has been ramping up shipments of crude by rail at a breakneck pace, with individual producers striking deals to load more oil on trains and Alberta's government buying rail cars to increase capacity.

"It's a function of people keeping an eye on supply concerns out of Venezuela", said Marshall Steeves, energy markets analyst at Informa Economics IG in NY.

Venezuela is very reliant on the US for its oil revenue.

Add on top of that the possibility of USA sanctions on Venezuela's oil, which is also heavy, and the refiners are in a squeeze.

Venezuela was once of the world's biggest exporters of oil with estimated reserves close to 300 billion barrels.

"The potential is that the starting to put things in motion and the risk for an acceleration in the decline in production from Venezuela is increasing", Petromatrix strategist Olivier Jakob said.

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