DTN Oil Update
Oil Futures Rise Following Reversal of Chevron's Venezuelan Permit
HOUSTON (DTN) -- Oil futures settled higher on Thursday following the announcement that the Trump administration would terminate Chevron's license to produce and export Venezuelan oil starting this week.
The NYMEX WTI and ICE Brent futures contract for April delivery rose by $1.62 to $70.24 bbl while the front-month ICE Brent rose by $1.41 at $73.94 bbl. The ULSD futures contract for March delivery increased by $0.0492 to $2.3935 gallon while March RBOB futures contract rose by $0.0484 to $1.9973 gallon.
The U.S. Dollar Index increased by 0.82% to 107.15 against a basket of foreign currencies.
U.S. President Donald Trump announced Thursday, Feb. 27, the cancellation of a permit issued by the United States government under Joe Biden's administration, which allowed Chevron to produce and export Venezuelan oil. This action is seen as a Trump administration strategy to put pressure on President Nicolas Maduro's government, which has failed to meet democratic conditions for last July's presidential election and to expedite the transportation of deported Venezuelan immigrants from U.S. territory.
In recent months, the Biden and Trump administrations have imposed stricter sanctions on Russian and Iranian oil trades, which were expected to put upward pressure on oil prices. However, high U.S. crude inventory levels and weak global oil demand due to the uncertainty about the trade tariffs war, offset the bullish sentiment causing the two crude benchmarks -- NYMEX WTI and ICE Brent futures contracts -- to fall to their lowest levels since December this week.
Expectations of ample supplies due to the possibility of an end of the Russia-Ukraine war, now in its third year, also contributed to the bearish tone in the oil futures market seen in previous trading sessions.
The Energy Information Administration reported Wednesday, Feb. 26, commercial crude oil inventories in the U.S. fell by 2.3 million bbl to 430.2 million bbl for the week ending Feb. 21, which was a larger draw compared to the 640,000 million bbl draw reported by API for the same reference week.
Separately, the Department of Labor reported Thursday morning that the advance figure for seasonally adjusted initial claims was 242,000 in the week ended Feb. 22, an increase of 22,000 from the 220,000 revised level from the previous week. The figure, however, was above the market expectation of 220,000.
