Brent slumps following latest development in Venezuela

The front-month ICE Brent contract has declined by $1.89/bbl on the day, to trade at $60.20/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Brent’s price has felt some upward thrust after the American Petroleum Institute (API) reported a drop in US crude stocks.

US crude oil inventories decreased by 2.8 million bbls in the week ending 2 January, according to API estimates cited by Trading Economics.

A slump in US crude stocks usually signals good demand and can give some support to Brent’s price.

Downward pressure:

Brent crude’s price has plunged after the market quickly assessed the fallout from Venezuela’s political turmoil and the uncertainty surrounding control of its oil assets.

Yesterday, US President Donald Trump said Venezuela’s interim administration would be “turning over” 30-50 million bbls of sanctioned oil to be sold at market prices.

The development comes after last week’s detention of President Nicolas Maduro and his wife from the country’s capital city Caracas.

The end of Maduro presidency in Venezuela could add fresh barrels to an already oversupplied market, according to analysts.

By Aparupa Mazumder

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