Oil prices stabilized on Wednesday after a run of gains, with markets digesting U.S. economic strength and ongoing supply uncertainty tied to Venezuelan crude exports and the continued war between Russia and Ukraine.
At the time of writing, Brent crude was trading just 0.13% higher at $62.46, while West Texas Intermediate had risen 0.17% to $58.48. Both contracts are up over 4.5% in the last five trading days, as geopolitical risk has pushed prices higher.
Robust U.S. economic data underpinned the latest rally, with Tuesday's data showing the U.S. economy growing at its fastest pace in two years in the third quarter, supported by strong consumer spending and rebounding exports.
Preliminary industry data indicated a build in U.S. crude stocks last week, with American Petroleum Institute figures showing a rise of about 2.4 million barrels. The official U.S. Energy Information Administration data for this week has not yet been released due to the Christmas holiday.
Supply risk headlines continue to support the market. In response to recent U.S. maritime actions, Venezuela’s legislature passed a law criminalizing what it terms “piracy or blockades” of its shipping, mandating up to 20 years in prison for facilitators. The move follows U.S. Coast Guard interceptions of Venezuelan-linked tankers and an expansion of U.S. sanctions enforcement in the Caribbean.
Multiple vessels carrying Venezuelan crude remain anchored offshore or in limbo as onshore tank storage fills, prompting state oil company PDVSA to resort to floating storage of excess barrels. This buildup reflects a growing export bottleneck that could tighten physical supply flows if sustained.
Meanwhile, Russian attacks on Ukraine have continued, as optimism over a potential peace deal fades. If peace talks fail, expectations of Russian supply returning to the market will disappear, pushing prices up further still.
Despite these supply flags, the broader market narrative still includes persistent concerns about excess crude inventories and a structural surplus. Long-term forecasts generally still see global oil inventories continuing to rise through 2026, which could exert downward pressure on prices beyond the current quarter.
By Charles Kennedy for Oilprice.com
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