Oil prices edged up on Tuesday buoyed by expectations of tightening global supply due to U.S. sanctions on Venezuela and production cuts led by OPEC.
But, disappointing U.S. factory data weighed on the market which on Monday saw U.S. West Texas Intermediate (WTI) and Brent crude reach 2019 highs as concern about the global economy persisted.
WTI futures were at 54.65 dollars per barrel at 0810 GMT, up nine cents or 0.16 per cent. They touched their highest level in more than two months at 55.75 dollars the previous day.
International Brent crude futures were at 62.56 dollars a barrel, up five cents or 0.08 per cent.
Analysts said U.S. sanctions on Venezuela had focused market attention on tighter global supplies.
“Fresh U.S. sanctions on the country could see 0.5-1 per cent 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 Treasury Department.
A flotilla loaded with about seven million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest U.S. sanctions and others whose buyers are weighing whom to pay, according to traders, shippers and Refinitiv Eikon data.
Meanwhile, oil supply from the 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 in January from October.
Weighing on oil markets, U.S. government data showed new orders for U.S.-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 U.S.-China trade tensions.
U.S. President, Donald Trump, last week said he would meet his Chinese counterpart, Xi Jinping in coming weeks to try to settle the two countries’ dispute.