By Barani Krishnan
Investing.com - The lights have gone out in Caracas again, just as U.S. oil tank readings are expected to have dipped for a third week in a row, to OPEC's joy.
WTI settled up $1.12, or 1.9%, at $59.94, after a session peak at $60.37. That was just shy of last week's 2019 high of $60.39 for the U.S. crude benchmark.
London-traded Brent, the global oil benchmark, rose 59 cents, or 0.9%, to $67.40 by 2:53 PM ET (18:53 GMT).
New York-traded West Texas Intermediate came close to matching that four-month high after Venezuela's second major blackout this month left the South American nation's streets and oil industry in darkness, worsening the crisis for embattled President Nicholas Maduro, whom the U.S. and some 50 other countries are seeking to replace.
Sulfur-laden Venezuelan oil is precious to U.S. refiners of diesel and heavy transport fuels, and they may not be able to get a barrel of it anymore due to Trump administration sanctions aimed at ensuring Maduro's government doesn't enjoy a cent of its petroleum revenue from the United States. Those sanctions and others on Iranian oil, combined with OPEC cuts, are expected to have resulted in a third-straight week of U.S. crude stockpile declines last week.
With the American Petroleum Institute due to release at 4:30 PM ET a snapshot on what official inventory figures for last week could have been, attention has turned again to the tight supply situation in the market.
Analysts expect the U.S. Energy Information Administration to announce on Wednesday an official decline of a little more than 1 million barrels in crude stockpiles for the week ended March 22 and will be perusing the API report for how close they might be with that estimate.
Figures released from the two often diverge, last week being the perfect example. The API, which collates its number from voluntary reporting by industry participants, cited a draw of a little more than 2 million barrels. The EIA, which requires mandatory reporting by all in the industry, ultimately reported a drawdown of nearly 10 million barrels.
Even if Wednesday's dataset shows a lower drop than forecast, a third-straight week of declines totaling more than 13 million barrels could immediately strengthen the tight supply narrative forced by the Venezuela/Iran sanctions and production cuts by OPEC, Russia and their allies under the enlarged OPEC+ pact. That, combined with flat interest rates from the Federal Reserve and a drop in U.S. oil drilling activity, has pushed crude prices up as much as 30% this year.
But once Wednesday comes and goes, economic worries and how those influence oil demand might matter even more.
"We are likely to see further consolidation and sideways trading in oil for a while unless demand concerns deepen further, especially from places like China and other emerging market economies," said Fawad Razaqzada, technical analyst at forex.com, who says last week's 2019 high of $60.37 must be decisively broken for oil bulls to progress.
The Saudis, however, aspire for at least $70 Brent and an ideal price of $80-$85, which may be difficult to achieve given the current economic backdrop.
"Brent is short-term bullish at around $65," said Matthew Tuttle, founder of Riverside, Conn.-based Tuttle Tactical Management, which has some $600 million in assets. "Anything more will depend on how dovish the Fed acts."