Feb. 1 (UPI) -- Crude oil prices rose early Friday amid supply concerns related to Venezuela based on reports of smaller-than-expected inventories.
Analysts also said Friday that reduced expectations of interest rate increases, which could make the U.S. dollar more expensive in emerging economies, which could push oil prices up as well.
West Texas Intermediate prices rose 0.4 percent to $53.99 per barrel as of 9:04 a.m. EST, while Brent prices traded 0.8 percent higher at $61.30 per barrel as of the same time.
"Earlier in the week, the API (American Petroleum Institute) reported a smaller-than-expected build in stockpiles, easing oversupply concerns. This adds to production curbs from the OPEC and the U.S. sanctions on Venezuela," FxDailyReport analyst Katrina Ang wrote in a report.
The United States this week imposed sanctions against Venezuela by ordering that any crude oil purchases by U.S. companies, including Venezuelan state oil Citgo subsidiary, must be deposited into accounts not accessible to Venezuelan President Nicolas Maduro -- and instead into those accessible by Congress leader Juan Guaido.
The move is expected to disrupt Venezuelan oil supplies, as Venezuelan officials search other markets that would assure payment can be collected by Maduro's government.
In addition, expectations of a weaker dollar following a Federal Reserve meeting this week is also contributing to higher prices.
"It's clear the Fed is going to stop 'riding the brakes' on interest rates and let the economy and markets coast for a while. That means it is content to have a weaker dollar, relative to foreign currencies," said Jeff Yastine, research analyst at Banyan Hill Publishing.
"A weak dollar is nearly always a positive for higher oil prices, conducive for faster economic growth -- especially in emerging markets outside the U.S. where oil consumption is rising quickly with growing middle class consumption," he added.
Crude oil and crude oil futures are denominated in dollars, which means oil becomes more expensive in other parts of the world when the greenback strengthens.
"Slowing economies in China and India have kept a lid on oil demand in recent quarters. But Chinese economic stimulus efforts, the (presumed) resolution of the US-China trade impasse, and a revival of India's economic growth in coming quarters, means oil demand will pick up again," Yastine said.
The early Friday rise comes after WTI prices gained nearly 16 percent during January, helped in part by a combination of expected reduction in crude oil supplies from OPEC, optimism that the U.S. and China could reach trade accords, as well as concern about potential disruptions in Venezuela.
Crude oil prices have declined from an Oct. 3 peak, when WTI prices reached $76 per barrel and Brent $86 per barrel.
Much of the decline resulted from the announcement of waivers by the United States to nations that buy crude oil from Iran. The announcement was made on Nov. 5, just as the sanctions announced six months earlier were set to start.
The waivers will expire in March, and if the United States does not renew them prices may increase in response to the reduced supplies.