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U.S. Sanctions Hit Venezuela Hard

Maduro

U.S. sanctions against Venezuela, announced this Monday as a part of a political pressure campaign exerted on President Nicolás Maduro, have rocked the oil industry which is still struggling to assess the full impact of the measure. Rumors are circulating about PDVSA, the Venezuelan national oil company, courting global trading houses to find avenues that would circumvent the impending sanctions. The U.S. Treasury is reportedly intent on sanctioning all entities that interact with accounts accessible by the government of President Maduro which would significantly complicate matters for PDVSA. 

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Tightening the already tight heavy sour crude market in the United States (and globally, too), the Venezuela sanctions seem to be leading inevitably to some sort of price hike. Oil prices have so far reacted in a modest manner, increasing 2 percent on Tuesday and 1 percent on Wednesday, with Brent Dated reaching the interval of 61.8-62 USD per barrel and WTI trading at 53.8-54 USD per barrel on Wednesday afternoon.

1. U.S. Commercial Stocks Rise Further

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-    U.S. commercial crude stocks have defied the trend of modest declines and soared by 7.9MMbbl during the week ended January 18 to 445 MMbbl. 
-    The week ended January 25 is expected to continue the recent growth trajectory – according to preliminary API data crude stocks have risen by 2.1 MMbbl.

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