Oil Edges Up As Market Eyes Tighter Supply

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Brent crude, the global benchmark, slipped 24 cents to $61.74 a barrel by 1442 GMT.

In an interview aired by private broadcaster Televen, Manuel Quevedo, also president of the oil company, commented on USA sanctions imposed last week on PDVSA and its US subsidiary Citgo. "Because the number was a little disappointing, it played into the slowing demand scenario", said Phil Flynn, oil analyst at Price Futures Group in Chicago.

The already persistent economic, financial and humanitarian crisis is expected to worsen under the sanctions, and in turn hamper production further.

"Fresh U.S. sanctions on the country could see 0.5-1 percent of global supply curtailed", said Vivek Dhar, mining and energy analyst, Commonwealth Bank of Australia.

Meanwhile, a Reuters survey found that supply from OPEC states had fallen the most in two years, as Saudi Arabia and its Gulf Arab allies over-delivered on pledged cuts, while Iran, Libya and Venezuela registered involuntary declines.

"The U.S. would look elsewhere for oil imports, and refiners will adapt to it".

Two weeks ago China announced that its official economic growth came in at 6.6 percent in 2018, the slowest pace since 1990.

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Oil prices edged higher for the first time in three sessions on Wednesday, although concerns over the outlook for the global economy capped gains.

The United States has promised to soften the sanctions against PDVSA if Caracas transfers control over the company to opposition leader Juan Guaido or any democratically elected government.

The producers known as OPEC+ started cutting production by 1.2 million barrels per day (bpd) from last month to avert a new supply glut, and OPEC has delivered nearly three-quarters of its pledged cuts already, a Reuters survey showed last week.

Trading proceeds at lower volumes in parts of East Asia due to Lunar New Year holiday.

"The fact that US crude oil and gasoline stocks rose more sharply than expected, as reported by the API after the close of trading yesterday, is weighing on prices", said Commerzbank analyst Carsten Fritsch.

Taking control of oil revenues - the basis of Venezuela's economy - from Maduro and giving it to Guaido, and the decision to sanction oil companies, is the boldest USA move so far to raise pressure on Maduro.

With a nervous market, traders are focused on the US State of the Union address by President Donald Trump. -China trade talks. Expect a bullish reaction by crude oil traders if Trump sounds optimistic about the progress of a trade deal.

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