Oil prices edge lower, tightening supply outlook supports

OPEC supply fell in January by the largest amount in two years

"Also underpinning the market is strong adherence to the OPEC-led supply cuts during January", reports OilPrice.com.

"We've been turning the heat up on the regime", Mnuchin said Wednesday, touting the effectiveness of fresh sanctions that President Donald Trump's administration imposed January 28. -China meetings next week ahead of a March 1 deadline for trade tariffs to rise.

Treasury Secretary Steven Mnuchin said US -imposed oil sanctions are putting pressure on the embattled Venezuelan President Nicolas Maduro, who the U.S.is trying to oust.

USA crude oil inventories C-STK-T-EIA climbed by 1.3 million barrels in the week that ended February 1, to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday. "Moreover, lower oil prices - prices were between 14% and 18% lower in January than their 2018 average - are likely to stimulate economic activity and oil demand, particularly in emerging markets", said Jean-Pierre Durante, Head of Applied Research at Pictet Wealth Management.

International Brent crude oil futures were at $62.72 a barrel, also up 21 cents or 0.4 percent, after closing down 0.4 percent in the previous session. The contract increased 35 cents to $54.01 on Wednesday. The global benchmark crude was at an $8.36 premium to WTI for the same month.

Meanwhile, average weekly USA crude oil production remained at the record 11.9 million barrels per day (bpd) C-OUT-T-EIA it reached in late 2018. They closed down 1.7 percent on Tuesday.

With a nervous market, traders are focused on the U.S. State of the Union address by President Donald Trump.

OPEC and its allies will probably extend their oil-cuts agreement later this year to keep prices at "comfortable" levels, according to Azerbaijan's energy minister.

"The fact that US crude oil and gasoline stocks rose more sharply than expected, as reported by the API after close of trading yesterday, is weighing on prices", said Carsten Fritsch, analyst at Commerzbank. The sanctions aim to block United States refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro.

The move ratcheted up pressure on Maduro to cede power to National Assembly leader Juan Guaido, who the USA and European allies have recognized as Venezuela's rightful president. "Around a third of Venezuela's exports head to the U.S., as such, we expect Venezuelan exports to quickly fall by 300,000 barrels per day (bpd) to around 700,000 bpd", ANZ bank said on Thursday.

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