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Crude oil prices trade higher on supply disruptions

By Renzo Pipoli
Crude oil prices trade higher on supply disruptions
Crude oil prices rose Friday morning following reports of supply disruption potential both in Venezuela and in a Saudi Arabian field affected by electrical problems. Photo by Brian Kersey/UPI | License Photo

Feb. 15 (UPI) -- Crude oil traded higher Friday morning in what looked like a potential fourth consecutive winning session fueled by reports of supply disruptions, an analyst said.

West Texas Intermediate front-month crude futures traded as of 9:05 a.m. EST 1.4 percent higher at $55.17 per barrel while Brent traded at $65.39, or 1.3 percent higher, as of the same time.

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"Crude oil led by Brent trades higher for a fourth day with ongoing OPEC production cuts and supply disruptions (Saudi field repairs, PDVSA) more than off-setting any worries the market may have about the future impact on demand as global growth continues to show signs of slowing," Ole Hansen, head of commodity strategy at Saxo Bank, told UPI.

In one report attributed to sources, Aramco partly shut its Safaniyah offshore field because of electrical problems caused by an accident, Upstream Online reported.

As for PDVSA, the company is in the middle of a political crisis not only affecting Venezuela, but with the rest of the world taking sides. Both President Nicolas Maduro and Parliament leader Juan Guaido want access to the country's state oil company management and revenue.

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In a bid to help Guaido, the United States has imposed sanctions to ban any U.S. company, including U.S.-based PDVSA subsidiary Citgo, from buying PDVSA crude unless the payment is made to Guaido.

This has led Maduro, who has control of the military as well as the company assets, to seek alternative markets for the estimated 450,000 barrels of crude per day it was selling to the United States. Countries that buy Venezuelan gold and oil cannot use the American financial system. Venezuela currently produces 1.15 million barrels per day.

"These developments have further been supported by momentum buyers after Brent crude yesterday broke the previous high at $63.6 per barrel," Hansen added.

Crude oil futures have seen gains throughout the week except Monday, when it fell to $52.41 per barrel.

WTI hit a low of $42.53 per barrel during the holiday-shortened Christmas week, where low trading volumes contributed to volatility.

WTI had traded at a high of over $ 76 per barrel on Oct. 3, its peak for the past year.

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