Oil prices settled lower for a second straight session on Wednesday as investors digested US President Donald Trump’s deal to import up to $2 billion worth of Venezuelan crude, a move that would lift supplies to the world’s largest oil consumer.
Brent crude futures lost 74 cents or 1.2 per cent to close at $59.96 a barrel, while the US West Texas Intermediate (WTI) crude fell by $1.14 or 2 per cent to $55.99 a barrel.
Venezuela will be “turning over” between 30 million and 50 million barrels of “sanctioned oil” to the US, President Trump wrote in a social media post on Tuesday.
Reuters said the deal between US and Venezuela initially could require the rerouting of cargoes that were bound for China.
Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship since mid-December due to a blockade on exports imposed by President Trump.
The blockade was part of a US pressure campaign against Venezuelan President Nicolas Maduro’s government that culminated in American forces capturing him over the weekend.
The US also seized an empty Russian-flagged, Venezuela-linked oil tanker in the Atlantic Ocean on Wednesday.
The M/V Bella 1 vessel was seized for sanctions violations “pursuant to a warrant issued by a U.S. federal court” after being tracked by a US Coast Guard cutter. The operation concludes a weeks-long chase that began in late December when the tanker abruptly turned away from Venezuela and headed into the open Atlantic to evade a US quarantine.
Crude oil inventories in the US posted a sharp draw last week, even as gasoline (petrol) and distillate stockpiles recorded sizable builds, according to new data released Wednesday by the US Energy Information Administration (EIA).
The EIA reported that US crude stocks dropped by 3.8 million barrels to 419.1 million barrels in the week ended January 2.
US gasoline (petrol) stocks increased by 7.7 million barrels in the week, the EIA said, while distillate stockpiles, which include diesel and heating oil, climbed by 5.6 million barrels in the week versus expectations for a rise of 2.1 million barrels.
Morgan Stanley analysts estimated the oil market could reach a surplus of as many as 3 million barrels per day in the first half of 2026, based on weak growth in demand last year and rising supply.
The Organisation of the Petroleum Exporting Countries and allies (OPEC+) reiterated earlier this month to pause the planned unwinding of its voluntary cuts totaling 2.9 million barrels per day, keeping that volume off the market through the first half of the year.