Oil prices get small lift for reported decline in gasoline stocks

July 19 (UPI) -- Data from the United States indicating strong gasoline demand and possible action against OPEC member Venezuela gave a small lift to oil prices early Wednesday.

The American Petroleum Institute reported gasoline inventories declined by more than 5 million barrels last week, a sign of surging demand for the summer driving season in the United States, the world's largest oil consumer and economic power.

Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter the drop in gasoline inventories was "huge" and "seems to suggest that product demand is gaining momentum."

Supply-side concerns helped drag crude oil prices below $30 per barrel last year and recent data could indicate some of that strain is easing as markets balance in the second half of the year.

The price for Brent crude oil was up 0.12 percent at 9:10 EDT to $48.90 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.09 percent to $46.44 per barrel.

Price movements may be muted ahead of the release of official U.S. data from the U.S. Energy Information Administration, which tends to be less bullish than API. A survey from S&P Global Platts this week forecast a draw on gasoline of 700,000 barrels. U.S. crude oil stocks were expected by Platts to fall 3 million barrels, while API reported a build in U.S. crude oil inventories.

U.S. crude oil production has been resilient against a weak energy market, earning praise from the International Energy Agency. According to the IEA, spending on shale oil exploration and production is on pace to grow by more than 50 percent this year, while U.S. natural gas will account for 40 percent of new global production in the next five years.

Flynn, however, said some of the smaller shale firms could face headwinds for investments because "they borrowed as much money as they could to raise production and they did it on a mountain of debt that many will not be able to pay off."

Meanwhile, a supply crunch could evolve if the United States decides to ban crude oil imports from Venezuela as a way to put pressure on President Nicolas Maduro. Bloomberg News reported Wednesday that oil may be a component of U.S. President Donald Trump's response to Maduro's efforts to silence his opponents.

Venezuela is the third-largest exporter of crude oil to the United States, behind Canada and Saudi Arabia. The four-year average for Venezuelan imports by the United States is down 6 percent from last year, while imports from Canada, the No. 1 oil supplier to the U.S. market, are up 11.4 percent.