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The barrel of oil reached its highest level in two months at nearly 64 dollars per barrel, the OPEC supply cuts and US sanctions against Venezuela's oil exports clarified the supply prospects, but prices have fallen back on the uncertainty surrounding the outlook for the global economy.
The Organization of Petroleum Exporting Countries and its allies began a new round of supply cuts in January. These restrictions, led by Saudi Arabia, have been aggravated by unintended losses that Venezuelan sanctions could worsen.
"Oil prices have run out of direction during today's trading session because of the conflicting signals from the market," said Abhishek Kumar, senior energy badyst at Interfax Energy in London.
"Insufficient progress in US-China trade negotiations is weighing on prices, although losses are limited by the implementation of the OPEC + agreement and concerns over Venezuelan oil supplies."
Brent, the world's benchmark, reached $ 63.63 a barrel, its highest level since December 7, but lost 86 cents to $ 61.89 at 14:10 GMT.
US crude hit a high of $ 55.75 in 2019. It then fell $ 1.18 from the previous $ 54.08.
"You have the sanctions against Venezuela, in addition to the reduction of the offer of Saudi Arabia," said Olivier Jakob, oil badyst at Petromatrix. "There is no sign of a surplus in the crude oil markets."
The OPEC supply plummeted in January by the largest volume recorded in two years, according to a Reuters survey released last week. This offset the lack of respect for the agreement reached so far by the Russian government, not a member of OPEC, on the reduction of production.
US sanctions against Venezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some badysts said after reviewing the details announced by the US government.
While OPEC and its allies cut production, the United States is increasing its supply. Nevertheless, the figures released Friday showed that the number of US oil rigs fell to the lowest level in eight months, which boosted prices.
"This suggests a less pronounced rise in US oil production," said Carsten Fritsch, an badyst at Commerzbank. "The oil market is more or less balanced," he added, citing the drop in OPEC production to a level close to the group's demand for crude oil.
The main drag on prices has been worries about a possible slowdown in demand this year due to the worsening economic growth outlook and developments such as the US-China trade dispute.
US President Donald Trump announced last week that he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the dispute. It is hoped that both parties will reach an agreement.
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