Crude oil prices fell in roller coaster trading Tuesday, pulling back from two-month highs after weak U.S. factory orders data revved up economic slowdown worries.
Despite the slide, investors expect U.S. sanctions on Venezuela and production cuts by Opec+ to eliminate a glut this year, buoying prices.
U.S. West Texas Intermediate futures ended Tuesday’s trading session down 90 cents, or 1.7%, to $53.66 per barrel, near the day’s low of $53.47/Bbl, Kallanish Energy reports.
WTI touched its highest price in more than two months, at $55.75/Bbl in Monday’s previous session.
Brent crude futures were down 41 cents, to $62.10/Bbl at roughly 2:25 p.m. ET, near a session low at $61.72/Bbl, and well off Monday’s two-month high of $63.63/Bbl.
Analysts believe U.S. sanctions on Venezuela are focusing market attention on tighter global supplies. Numerous tankers are currently in the water off the Venezuelan coast, unable to move because state-owned PVDSA is demanding payment, which would run afoul of U.S. sanctions.
Supplies of heavy crude oil produced in Venezuela are scarce, as other providers like Mexico and Canada have also faced challenges to output and export.
Opec and fellow producer-countries, led by Russia, agreed to production cuts totaling 1.2 million barrels per day (Mmbpd), effective Jan. 1, to reduce increasing supply.
The oil industry generally believes the curbs will help to balance the market in 2019, particularly with crude production growing in the U.S.
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