Oil prices steady amidst hope on the U.S, China trade talks

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Oil prices were steady on Friday, torn between hopes the United States and China could soon settle their trade disputes and new data raising fresh concerns over China’s economic slowdown.

International Brent crude oil futures were at $60.93 per barrel at 0712, 9 cents above their last close.

U.S. West Texas Intermediate (WTI) futures were at $53.80 per barrel, virtually unchanged from their last settlement.

Oil prices were supported as U.S. president, Donald Trump, said on Thursday he would meet with the Chinese president, Xi Jinping, soon, to try to seal a comprehensive trade deal.

But crude markets were weighed down by a survey on Friday that showed China’s factory activity shrank by the most in almost three years in January amid slumping orders, reinforcing fears a slowdown in the world’s second-largest economy is deepening.

Despite these concerns, traders said oil markets overall are being supported by supply cuts from the Organization of the Petroleum Exporting Countries (OPEC), which, according to a Reuters poll pumped 30.98 million barrels per day (bpd) in January, down 890,000 bpd from December.

In Venezuela, meanwhile, U.S. sanctions imposed on state oil firm PDVSA this week are keeping tankers stuck at ports and are expected to accelerate the supply drop in February.

“The latest U.S. sanctions could directly halt around 500,000 barrels per day (bpd) of Venezuelan exports to the U.S.,” Citi bank said.

Much Venezuelan crude oil is rated as heavy and requires the light petroleum naphtha, much of it supplied from the United States, for dilution before export to refineries.

“An additional 350,000 bpd of Venezuelan oil output is at risk due to the lack of U.S. diluents, a result of the U.S. product exports ban with immediate effect,” Citi said.

Some relief, especially to U.S. refiners, may come in the form of Canadian heavy crude, despite infrastructure constraints between the two countries.

The Alberta government announced it was increasing the oil production curtailment limit for February and March to 3.63 million bpd, which translates in restoring 75,000 bpd of the 325,000 bpd cut announced in December, U.S. investment bank Jefferies, said on Friday.

(Reuters/NAN)

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