(Bloomberg) — Oil gained as technical support turbocharged a rally sparked by progress in international trade talks, undercutting a US move to restore Chevron Corp.’s ability to pump oil in Venezuela.
West Texas Intermediate climbed 1.2% to settle above $66 a barrel, following four sessions of declines. The European Union and the US are progressing toward a deal that would set a 15% tariff for most imports, similar to the one President Donald Trump struck with Japan. That would be a smaller rate than investors feared, with the US president earlier threatening a 30% levy on most goods if an agreement wasn’t reached by Aug. 1.
The US benchmark also pushed through its 50-day moving average, triggering a spate of technical buying just ahead of the market’s close.
The technical boost erased an earlier slide spurred by the Trump administration’s decision to let Chevron resume pumping oil in Venezuela, raising the prospect of increased supplies flooding into a market already facing the threat of oversupply.
US imports of Venezuelan crude have ground to a halt, down from 300,000 barrels a day in January, according to Matt Smith, Americas lead oil analyst at market intelligence firm Kpler. Still, energy products from the Latin American country have already accounted for 15% of waterborne deliveries to the US Gulf Coast this year, he added.
“The revocation of Chevron’s license has been to the benefit of China, given barrels have been redirected there,” Smith said. “Perhaps the realization of this, along with the supply issues on the US Gulf Coast, has been a driver behind the reversal of the decision.”
Oil prices have been in a holding pattern this month, with tightness in global diesel markets offset by expectations of a deluge of crude supply from OPEC as the group raises production quotas. While diesel inventories in the US are starting to build back up, they’re still at the lowest seasonal level since 1996.
The relative calm comes after a period of choppy trading that Norwegian oil giant Equinor ASA said Wednesday had hurt its energy trading business. France’s TotalEnergies SE painted a dour outlook Thursday, saying the oil market is facing “abundant supply that is fueled by OPEC ’s decision to unwind some voluntary production cuts.”
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