Oil prices stabilise at $61.58/b over by OPEC production cut

Investors perceive oil supply to be fairly tightly balanced against demand, but concern about the longer-term outlook for global economic growth has been undermining any bullish moves.

Futures were little changed in NY.

Concerns about an unexpected rise in US crude inventories reported on Wednesday countered gains driven by the possibility of USA sanctions on Venezuela's oil industry.

The United States signalled on Thursday it may impose sanctions on Venezuelan exports after recognising opposition leader Juan Guaido as interim president this week, prompting President Nicholas Maduro to cut ties with Washington. However, this bullish view is eclipsed by the above mentioned possibility of a slowdown in the global economy and fears of a supply glut on the back of increasing USA oil production.

"It would make a tight market even tighter".

Venezuela is a "big unknown", Marco Dunand, chief executive officer of commodities trader Mercuria Energy Group Ltd., said in an interview at the World Economic Forum in Davos, Switzerland.

Japan on Wednesday reported that its December 2018 exports fell the most in more than two years, dragged down by plummeting shipments to China and wider Asia as weak global demand and U.S. -Sino trade frictions take their toll on the trade-reliant economy.

Crude had already posted a strong start to the year before the Venezuela flare-up, as the Organization of Petroleum Exporting Countries and its allies cut output.

'This lower oil price environment may give Trump more cushion to implement these sanctions. That mood faltered in recent days as data showed rising production in the USA and weaker economic growth around the globe.

"There's some optimism now that the government shutdown, at least temporarily, may be behind us", said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise in Leawood, Kansas. Despite Friday's gains, oil and equities remained on track for their first losing week of the year.

U.S. West Texas Intermediate (WTI) crude futures were trading at $53.61 per barrel, up 48 cents, or 0.9 percent.

Those differentials have narrowed since the government of Alberta announced last month it would impose crude oil production curtailments of 325,000 bpd starting January 1.

Oil climbed as growing instability in Venezuela outweighed fresh reminders of the American shale boom.

The output surge has swollen US fuel stocks, and crude inventories rose by 8 million barrels last week, according to official data released on Thursday.

A major disruption in Venezuela could be a game-changer.

Futures in NY rose slightly on Thursday as Venezuelan President Nicolas Maduro defied calls from the USA and other nations to cede control of the Latin American country that holds the world's biggest crude reserves.