WASHINGTON (dpa-AFX) - Extending yesterday's decline, crude oil plunged today due to emerging supply side concerns following U.S. attempts to gain control of Venezuelan oil wealth.
WTI Crude Oil for February delivery was last seen trading down by $1.11 (or 1.94%) at $56.02 per barrel.
On January 3, U.S. forces barged into Venezuela to airlift its President Nicolas Maduro and his wife to the U.S. and put them on trial.
U.S. President Donald Trump, who ordered the high-intensity raid and monitored the entire operation, soon announced that the U.S. will be 'running' Venezuela and the U.S. would have access to the nation's oil wealth.
Currently, an interim government is run by Vice President Delcy Rodriguez.
Yesterday, Trump announced that Venezuela would transfer 30 million to 50 million barrels of 'extra-heavy crude' to the U.S. Trump plans to sell up to $3 billion worth of Venezuelan crude presently stored in tankers and reserve facilities.
Reportedly, Venezuela will continue to supply even beyond the initial 50 million barrels.
As this could offset the buying needs for the world's largest oil consumer, supply concerns are spiking. Simultaneously, China, which takes about 80% of Venezuelan crude exports, is set to face a disruption in its imports.
After asking for 'total access' for U.S. oil majors to Venezuela's oil, Trump is set to meet high-level executives from ExxonMobil, Chevron, and ConocoPhillips to discuss his plans.
However, energy experts are skeptical about Trump's plan, as they observe that resurrecting Venezuela's degraded oil infrastructure would need billions of dollars in investments and more than a 10-year period.
Russia, China, and Iran, the three major partners of Venezuela, have condemned the U.S. offensives.
U.S. forces have also seized M/V Bella 1 for 'sanctions violations' after long chases for a few weeks when the tanker turned away from Venezuela into the open Atlantic.
Yesterday, data from American Petroleum Institute revealed that U.S. crude oil inventories fell by 2.8 million barrels in the week ended January 2, reversing the 1.7 million barrel build from the week before.
According to the U.S. Energy Information Administration, for the week ending January 2, crude oil inventories in the U.S. fell by 3.831 million barrels. At the Cushing, Oklahoma delivery hub, stocks rose by 728,000 barrels.
For the same period, gasoline inventories jumped by 7,702,000 barrels, distillate inventories increased to 5,594,000 barrels, and heating oil inventories climbed by 672,000 barrels.
According to a Financial Times report, oil majors Chevron and Quantum Energy have united to bid jointly for the international assets of Russian oil major, Lukoil. The assets were on the market after the U.S. imposed sanctions on Lukoil.
After a meeting in Paris, France, the European allies of Ukraine have unitedly stood up to provide security guarantees to Ukraine, (a plan backed by the U.S.), if Russia agrees to the U.S.-authored ceasefire plan to end the Russia-Ukraine war.
As Russian oil exports are currently sanctioned by the U.S. and the West, this move, seen as a progress, has added to supply concerns.
The U.S. dollar index was last seen trading at 98.66, up by 0.08 (or 0.08%) today.
On the monetary front, the U.S. Federal Reserve's FOMC meeting is scheduled for January 27-28 at the conclusion of which the central bank's decision on interest rates would be announced.
Currently, CME Group's FedWatch Tool is indicating just an 11.6% chance of a quarter-point rate cut at n the upcoming meeting.
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