Crude prices fluctated settling lower as a key gauge on the US service sector showed January was soft, but that the slowdown is not accelerating.
Earlier crude prices recovered most of yesterday’s decline as Russia appears to delivering their end of the production cuts, markets brace for a significant reduction in Venezuelan production and US shale drilling could be easing up after hitting record output. Russia reduced output by 47,000 b/d in January, alleviating concerns that the OPEC producer group would fail to come through on delivering their cuts as they watch US production soar to record output. The uncertainty over how long the Presidential standoff will last is also helping keep prices West Texas Intermediate crude above $50. The general consensus is that Maduro will eventually lose military support or see China be open to working with opposition leader Juan Guaido and that could open the door for fresh elections, but the timetable for those scenarios is very uncertain. Wednesday’s US crude inventory data is likely to see the effects of the polar vortex disrupt the reading and traders may not put much weight into it, expectations are for a build of 1.5 million barrels. The key range in place for oil is currently between $49.50 and $52.00