Oil prices rose for the first time in three days as President Trump canceled Chevron’s Venezuela operating license. Brent crude increased by 0.33% and West Texas Intermediate crude by 0.26%. The news caused a market reaction as concerns about crude supply resurfaced amidst ongoing geopolitical tensions and a surprise increase in US fuel inventories.
On February 27, oil prices experienced their first increase in three days, climbing amid renewed concerns over supply after President Donald Trump revoked Chevron’s operating license in Venezuela. Brent crude futures rose by 24 cents, or 0.33%, reaching $72.77 per barrel, while US West Texas Intermediate crude increased by 18 cents, or 0.26%, to $68.80 per barrel. This uptick followed a downturn a day prior, which saw prices hit their lowest levels since December 10 due to a surprise increase in US fuel inventories, indicating a potential decline in demand, alongside ongoing negotiation efforts for a ceasefire between Russia and Ukraine.
The revoked license had been issued by Trump’s predecessor, Joe Biden, over two years previously, allowing Chevron to export around 240,000 barrels of crude oil daily from Venezuela, which accounts for more than a quarter of the country’s total oil output. The cancellation signifies that Chevron will cease all exports of Venezuelan oil, which has contributed to heightened market volatility. “The Venezuela news triggered unwinding after the recent sell-off amid Russian-Ukraine ceasefire talks,” stated Hiroyuki Kikukawa, president of NS Trading, noting that potential purchases by the US Strategic Petroleum Reserve have also bolstered the market, especially since WTI prices were at a two-month low.
President Trump recently emphasized his administration’s intention to quickly replenish the Strategic Petroleum Reserve, criticizing the Biden administration’s decision to draw from these reserves to mitigate gasoline prices. Market observers are remaining vigilant regarding the peace negotiations between the US and Ukraine. On Friday, President Zelenskiy is expected to visit Washington to finalize an agreement relating to rare earth minerals, with the success of such deals contingent on ongoing discussions and continued US assistance.
The Energy Information Administration reported an unexpected decline in US crude oil inventories alongside an increase in refining output, while gasoline and distillate inventories reported unanticipated gains. Kikukawa remarked that this seasonal off-peak period, characterized by the shift from kerosene to gasoline demand, suggests the recent sell-off due to rising product inventories has likely reached its conclusion. Moreover, Goldman Sachs indicated that the US administration’s dual objectives focusing on commodity dominance and affordability support a projected price range of $70 to $85 per barrel for Brent crude, which is favorable for substantial growth in US supply.
In summary, oil prices have rebounded following President Trump’s decision to revoke Chevron’s operating license in Venezuela. This action, combined with the unexpected decline in US crude inventories, suggests a potential shift in market dynamics. Market participants remain attentive to the geopolitical landscape and ongoing negotiations regarding peace talks, all of which could significantly impact future oil supply and pricing.
Original Source: theedgemalaysia.com
