Oil prices surged on Thursday following President Trump’s cancellation of Chevron’s licence to operate in Venezuela, raising supply concerns. Brent crude rose 0.98 percent to $73.24 per barrel, while U.S. West Texas Intermediate climbed by 0.93 percent to $69.26. The market’s response is tempered by developments in Ukraine and unexpected increases in U.S. gasoline and distillate inventories.

Oil prices experienced a rebound on Thursday following U.S. President Donald Trump’s decision to revoke Chevron’s licence to operate in Venezuela, raising concerns about supply levels. This increase, however, faced constraints due to emerging prospects of a peace deal in Ukraine, which may lead to an increase in Russian oil supplies, alongside an unexpected rise in U.S. gasoline and distillate inventories.

By 1049 GMT, Brent crude oil futures rose by 71 cents, or 0.98 percent, approaching $73.24 a barrel. Concurrently, U.S. West Texas Intermediate crude oil futures experienced an increase of 64 cents, or 0.93 percent, reaching $69.26. Both contracts had previously settled at their lowest levels since December 10 and have encountered approximately a 4.5 percent drop throughout the month.

PVM analyst Tamas Varga indicated that oil prices are stabilizing around their two-month lows subsequent to Trump’s retraction of Chevron’s Venezuelan oil export licence. Additionally, Trump’s role in attempting to foster a peace agreement between Russia and Ukraine remains under scrutiny.

President Trump noted that Ukrainian President Volodymyr Zelensky will be visiting Washington on Friday to formalize an agreement regarding rare earth minerals. Conversely, Zelensky articulated that the success of these discussions is contingent upon sustained U.S. support.

Varga commented, “Markets like clarity as opposed to uncertainty. Unless a clear path is presented on tariffs and Eastern European peace, oil prices will remain on the defensive with sporadic and spontaneous headline-based rallies.” In the meantime, U.S. crude oil inventories unexpectedly decreased last week as refining operations increased, while gasoline and distillate stocks showed surprising gains, as reported by the Energy Information Administration on Wednesday.

In summary, oil prices are influenced by geopolitical developments, particularly Trump’s cancellation of Chevron’s Venezuela operating licence, which has raised supply concerns. However, potential peace talks in Ukraine and rising U.S. inventory levels may temper these price increases. Analysts emphasize the importance of clarity in geopolitical actions for sustained price stability in the oil market.

Original Source: www.theglobeandmail.com

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