Oil prices sank about one per cent Wednesday after a United States government data showed that the country’s crude stocks unexpectedly rose last week as exports slowed due to a chemical spill at the country’s busiest energy port.
While the global benchmark, Brent crude futures fell 51 cents, or 0.8 per cent, to $67.46 per barrel, the US crude, West Texas Intermediate (WTI) dropped 83 cents, or 1.4 per cent, to $59.11 per barrel.
United States crude inventories rose last week by 2.8 million barrels, compared with analysts’ expectations for a decrease of 1.2 million barrels, the United States Energy Information Administration said.
Crude stocks at the Cushing, Oklahoma, a delivery hub, rose by 541,000 barrels and exports fell 506,000 barrels per day, the EIA said.
A petrochemical tank fire and chemical spill last week along the Houston Ship Channel hampered crude shipments for several days.
The US Coast Guard on Monday reopened portions of the Houston Ship Channel with restrictions on waterways affected by chemical leak.
Further disruptions to Venezuelan exports helped to limit losses.
The United States had in February announced sanctions intended to produce the most damage possible to the government of President Nicolás Maduro, the country’s oil sector and its state-run oil company, PDVSA.
Washington had in January recognised opposition leader, Juan Guaidó – who is the leader of the country’s National Assembly – as the rightful head of state.
Venezuela’s Congress, which has been stripped of most of its powers by the government, had also described Maduro is a “usurper”.
Washington embarked on an open campaign with Guaidó to oust Maduro.
The White House is trying to make oil revenues directly reach ordinary Venezuelans and bypass the government of Maduro, which owns most of the oil industry through PDVSA.
US National Security Adviser John Bolton said the sanctions would block $7 billion (£5.4 billion) in PDVSA’s assets and more than $11 billion in lost export proceeds over the next year.
Reuters reported that on top of US sanctions in January, which banned US refiners from buying Venezuelan oil, the Organisation of Petroleum Exporting Countries (OPEC) member’s main oil export port of Jose and its four crude upgraders were unable to resume operations following a massive power blackout on Monday, the second in a month.
Oil prices have jumped more than 25 per cent this year, supported by supply curbs by OPEC and other major producers, along with US sanctions on exports from Venezuela and Iran.
Bullish supply and demand signals from the United States were also supportive.
Crude flows from two key shale basins to the Cushing, Oklahoma delivery point for US crude futures slowed in March due to winter production outages, dealers said.
Hedge funds and other money managers have increased bets that demand for oil will be sustained, even as the market rallied last week.