Oil prices climbed sharply on Thursday morning, with both Brent crude and U.S. West Texas Intermediate (WTI) futures trading up 2% in early U.S. trading hours as investors assessed the ongoing fallout from dramatic political and oil-market developments in Venezuela.
The gains mark a rebound after recent churn in global energy markets on supply concerns, U.S. inventory draws and heightened geopolitical risk.
At 9.28 a.m. Thursday, Benchmark Brent crude was trading up 2.02% at $61.17, while U.S. WTI was up 1.95% at $57.05, reflecting renewed buying interest and a risk premium relating to Venezuela’s oil sector and associated geopolitical tensions.
Bullish sentiment has been underpinned by a mix of technical buying and fundamental drivers, including stronger than expected U.S. crude inventory data and concerns that turmoil in Venezuela could disrupt flows in the Western Hemisphere. The broader market, however, continues to wrestle with oversupply and mixed demand cues.
Energy markets remain on edge since President Nicolas Maduro’s capture and his subsequent arraignment in a U.S. court this week on drug-trafficking charges. His capture adds to the ongoing uncertainty over Caracas’ oil policy and output stability. Adding further fuel to the fire, Washington announced that it will control decisions on Venezuelan oil sales indefinitely, a move that places Washington in charge of how proceeds from state-owned PDVSA’s barrels are used.
By Charles Kennedy for Oilprice.com
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