Picture: REUTERS
Picture: REUTERS

London — Oil prices edged up on Tuesday, buoyed by expectations of tightening global supply due to US sanctions on Venezuela and production cuts led by oil cartel Opec.

However, disappointing US factory data weighed on the market, which on Monday saw US West Texas Intermediate (WTI) and Brent crude reach 2019 highs, as concern about the global economy persisted.

WTI futures were at $54.65 a barrel at 8.10am GMT, up 9c or 0.16%. They touched their highest level in more than two months at $55.75 the previous day. International Brent crude futures were at $62.56 a barrel, up 5c or 0.08%.

Analysts said US sanctions on Venezuela had focused market attention on tighter global supplies. “Fresh US sanctions on the country could see 0.5% to 1% of global supply curtailed,” said Vivek Dhar, mining and energy analyst at Commonwealth Bank of Australia.

The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran last year, experts said on Friday after looking at details posted by the US treasury department.

A flotilla loaded with about 7-million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest US sanctions and others whose buyers are weighing who to pay, according to traders, shippers and Refinitiv Eikon data.

Meanwhile, oil supply from Opec fell in January by the largest amount in two years, a Reuters survey found. Saudi Arabia and its Gulf allies over-delivered on the group’s supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines.

Russia is fully complying with its pledge to cut oil production gradually, Russian energy minister Alexander Novak said on Monday, adding that production fell by 47,000 barrels per day (bpd) in January from October.

Weighing on oil markets, US government data showed new orders for US-made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.

The global economic outlook and prospects for growth in fuel demand have been clouded by poor economic data in China and US-China trade tensions. US President Donald Trump said last week that he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the two countries’ dispute.