Oil up amid Venezuelan blackout; growth fears cap gains
LONDON, March 27, 2019 – Oil prices rose on Wednesday in Asia amid a second major blackout in Venezuela. Gains were limited as traders remained cautious on a slowing global economic growth.
US Crude Oil WTI Futures edged up 0.2% to $60.04 by 1:10 AM ET (05:10 GMT), while International Brent Oil Futures also rose 0.2% to $67.60.
On Monday, Venezuela suffered yet another major electricity blackout. The power cut worsened the crisis for embattled President Nicholas Maduro, whom the US and some 50 other countries are seeking to replace.
The US sanctions on Venezuela and Iran, combined with OPEC cuts, have been cited as supporting oil prices, which have gained more than 25% so far this year.
However, increasing concerns over the impact of a global economic slowdown and uncertainties surrounding events such as the Sino-US trade developments and Brexit kept gains in check.
“We seem to have reached a state of equilibrium after the recent headline-driven choppy trading and we need to see some new impetus for price direction,” said Jeff Halley, senior market analyst at OANDA in Singapore, in a Reuters report.
The US yield curve inverted late last week following the release of weak data coming out from the US and Europe. The inversion sparked fears of a potential recession in the US.
China also reported on Wednesday that the country’s industrial profits in the first two months of 2019 slumped at the fastest pace since 2011, adding to concerns about the global economic growth.
“The global growth and data concerns that drove the downside moves over the last few days are still with us and investors will be looking for fresh reasons for the market to rally further over the next few sessions,” analysts from Rakuten Securities Australia said in a note that was cited by CNBC.”
In other news, the American Petroleum Institute, a trade organization, said late on Tuesday that US crude inventories rose 1.9 million barrels in the latest week, while analysts had forecast a decrease of 1.2 million barrels.
Analysts expect the US Energy Information Administration to announce later in the day an official decline of a little more than 1 million barrels in crude stockpiles for the week ended March 22 and will be perusing the API report for how close they might be with that estimate.