Oil settles higher after US seizes tanker off Venezuela’s coast

Oil prices settled higher on Wednesday after officials said the US seized an oil tanker off the coast of Venezuela, adding to concerns about immediate supplies.

Brent crude futures rose 27 cents, or 0.4 per cent, to settle at US$62.21 a barrel, while US West Texas Intermediate crude futures gained 21 cents, or 0.4 per cent, to close at US$58.46 per barrel.

The US seized an oil tanker off the coast of Venezuela, two US officials told Reuters. The officials did not name the tanker and did not say specifically where the interdiction led by the US Coast Guard took place.

Oil prices will likely react more sharply if the seizure is followed up by more such actions, said Ed Hayden-Briffett, oil analyst at Onyx Capital Group.

Both benchmark oil contracts had extended gains to about 1 per cent since settlement.

The tanker seizure further inflames concerns about immediate supplies in a market that was already worried about movements of Venezuelan, Iranian and Russian barrels, said Rory Johnston, founder of the Commodity Context newsletter.

A Ukrainian official earlier on Wednesday said the country’s sea drones had struck and disabled a tanker involved in trading Russian oil, the third such strike by Ukraine in two weeks.

Meanwhile, a divided US Federal Reserve reduced its benchmark interest rate by a quarter of a percentage point, as expected, which could help lift oil demand by boosting economic growth.

Fed Chair Powell declined to say whether there would be another rate cut in the near future, but said the US central bank is well positioned to respond to what lies ahead for the economy.

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Oil prices had declined nearly 1 per cent earlier in Wednesday’s trading session after US government data showed the country’s crude oil inventories fell by 1.8 million barrels in the week ended Dec 5, which was smaller than analysts’ average expectation of a draw of 2.3 million barrels in a Reuters poll. REUTERS

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