Jan. 29 (UPI) — Crude oil prices were higher early Tuesday amid renewed concern about Venezuelan supplies but market worries about potential demand reduction in China kept prices from going up more, an analyst said.
West Texas Intermediate prices rose 0.9 percent to $52.47 per barrel as of 8:40 a.m. EST while Brent crude future prices rose 1 percent to $60.43 per barrel.
“Oil prices continue to hang finely in balance with the possible impact of sanctions on Venezuela impacting the supply of oil and the continued U.S. vs. China (trade) dispute impacting the demand for oil,” Sukrit Vijayakar, analyst at Trifecta Consultants, told UPI.
The rise comes a day after the United States government on Monday imposed new sanctions designed to prevent Venezuelan President Nicolas Maduro, who is not recognized by several nations including the United States, to continue to tap any money from the state oil company PDVSA’s oil exports.
While Venezuelan oil exports to U.S companies can continue, funds need to be deposited in accounts to which Maduro has no access.
Venezuela’s National Assembly leader Juan Guaido also on Monday said that he will move to elect a new board of directors at PDVSA and its U.S. subsidiary Citgo, stepping up the confrontation with Maduro.
Venezuela produces some 1.15 million barrels per day of crude oil. Traders and investors have contemplated the possibility that a deepening political crisis in Venezuela could lead to sharp production declines and cause market imbalances.
However, on the other hand, the crude oil market has long seen bearishness related to a trade dispute between the United States and China that has seen exchanges of tariffs and countertariffs.
A demand reduction for energy in China, biggest crude oil importer in the world, would affect markets. In addition, an economic confrontation between the United States and China, the world’s two biggest economies, could also lead to economic slowdowns elsewhere.
The United States and China are working to try to reach agreements by March, a deadline agreed by both nations in November before announced new additional tariffs go into effect.
“The Trump administration will see the sanctions on Venezuela working in sync with their pressure on China given that the latter is heavily invested there,” Vijayakar added.
Chinese investments in Venezuela include the joint venture Sinovensa, owned by a PDVSA subsidiary and China National Petroleum Corporation.
