An extended rally in crude oil prices stalls out in early Tuesday trading as the psychological pressure from sanctions on OPEC-member Venezuela fade. File photo by Monika Graff/UPI |
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Aug. 1 (UPI) -- The rally in crude oil prices halted early Tuesday after Washington spared Venezuelan oil from sanctions, though market indicators could keep the bulls running.
The U.S. Treasury Department placed sanctions on Venezuelan President Nicolas Maduro after he went ahead with weekend elections seen as consolidating his grip on power. A restriction on Venezuelan crude oil was seen as a possible move by the United States, though Treasury Secretary Steven Mnuchin said the object was "not to do anything that hurts the people of Venezuela."
A U.S. government source told S&P Global Platts last week sanctions would do more harm to the U.S. refining sector than on Venezuela's economy.
Most major benchmarks passed over the $50 mark amid the geopolitical tensions, but pulled back after only Maduro was targeted by additional U.S. pressure. Last week, Carlos Erik Malpica Flores, the former vice president for finance at state oil company Petroleos de Venezuela, known also as PDVSA, was sanctioned by the U.S. government in its only direct move against the sector.
The price for Brent crude oil dropped 0.7 percent lower at 9:15 EDT to $52.35 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.58 percent to $49.88 per barrel.
Markets may be influenced late in the day Tuesday when the American Petroleum Institute releases its data on oil and gasoline stockpiles in the United States, the world's leading economy and top energy consumer. A survey of analysts from Platts found crude oil stockpiles are expected to drop by 2.8 million barrels from last week and gasoline inventories are expected to decline 1.3 million barrels in signs of a steady balancing in the energy market.
"U.S. crude oil inventories likely need to keep falling by significant amounts for crude oil futures to break above current levels near $50 per barrel and prevent an ongoing rally from stalling out," Platts Oil Futures Editor Geoffrey Craig said in an emailed statement.
The U.S. economy, meanwhile, continues to show growth patterns remain steady, but stubborn. The Commerce Department reported Tuesday that personal incomes in June were "virtually unchanged" from the previous month.
Earnings season continued with British energy company BP reporting second quarter headwinds in large part because of production expenses in Angola. CEO Bob Dudely said that, even with the recent rally in oil prices, his company was prepared for "the new oil price environment," where prices are stuck at about 50 percent below 2014 levels.
