Oil falls 1 percent as supply concerns fade


Less foreign oil is reaching American shores, as OPEC production cuts kick in and US sanctions on Venezuela curb its exports.

Venezuela exports around 1 million barrels of oil per day, about 1 percent of global production, of which half heads to the United States.

Weighing on oil markets, USA government data showed new orders for US -made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.

USA crude futures were down 50 cents, or 0.9 percent, at $54.06 a barrel by 1400 GMT.

However, US crude stocks rose last week even as refineries boosted output, while gasoline and distillate stocks increased, data from industry group the American Petroleum Institute showed on Tuesday.

"PDVSA will redirect exports to other customers in Europe and Asia", the technical adviser at Venezuela's oil company PDVSA and Petroleum Ministry, Ronny Romero, told Sputnik.

Brent crude, the global benchmark, was trading below $63 a barrel on Tuesday compared to $61 on January 29, the day after the United States imposed sanctions on Venezuelan state oil firm PDVSA.

A report published by the US Energy Information Administration (EIA) last week showed that the country's oil production averaged a record 11.9 million barrels a day in November, up 345,000 from October and up almost 1.8 million compared with November 2017's average figures. The sanctions aim to block US refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro.

"The price has yet to react in any noticeable way", Fritsch said of the sanctions announced last week.

"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.

The January decrease was the largest in the past 12 months as Opec cut production in response to falling oil prices.

Venezuela, like fellow OPEC members Iran and Libya, was exempt from production curbs under the OPEC+ deal on expectations that its output faced involuntary downward pressure in 2019.

International Brent crude oil futures were at $62.72 a barrel, also up 21 cents or 0.4 percent, after closing down 0.4 percent in the previous session.

Also dampening market sentiment were worries about weaker global economic growth and the U.S. "China trade talks", said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

US President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in coming weeks to try to settle the two countries' dispute.