Oil Trading Flat Despite Analysts Bracing For U.S. Invasion Of Venezuela

Meanwhile, possible OPEC output hike perceived as having market benefits: File Image/Pixabay

Despite Friday’s oil trading being described by at least one media outlet as “wild,” crude prices remained stubbornly range bound as analysts debated whether U.S. president Donald Trump was going to invade Venezuela, another possible output increase from overseas, and dismal economic news from China.

Brent settled up 7 cents at $65.07 per barrel, and West Texas Intermediate settled up 41 cents at $60.98 per barrel; Brent and WTI are set to fall 2.6 percent and 2 percent, respectively, in October.

The Venezuela issue was triggered by Trump denying rumours of U.S. air strikes being imminent despite the aircraft carrier Gerald Ford stationed off the Venezuelan coast; this caused Phil Flynn, senior market analyst at Price Futures Group Inc., to remark, “Is this Donald Trump’s trick or treat?” said adding that the brash billionaire also denied a planned attack on Iran before carrying out airstrikes against the Islamic Republic.

Flynn added, “There definitely was an impact on the market when the first report of a planned attack on Venezuela came out; if there is an attack over the weekend, prices will spike on Monday.”

John Kilduff, founding partner at Again Capital, agreed, noting, “It’s pretty clear something is afoot there; for oil traders, it’s a classic situation of buy now and ask questions later.”

Gregory Brew, a geopolitical analyst at the Eurasia Group, was somewhat upbeat in his assessment of a possible invasion, stating, “If the U.S. intention is regime change, there is a vested interest in keeping energy infrastructure more or less intact, as that would provide financial support for whatever government succeeds.”

Bloomberg was considerably more gloomy, writing, “a potential military clash stands to impact major economies from China and India to Western Europe, and may complicate business for U.S. Gulf Coast refiners that rely on Venezuelan heavy crude to feed production lines,” and the news agency added that the South American nation sent 126,000 barrels per day (bpd) to the U.S. in September.

Also weighing on oil prices was China, which released an official survey showing the country’s factory activity shrank for a seventh month in October.

As for talk this week that the Organization of the Petroleum Exporting Countries (OPEC) was ready to enact another albeit small output increase (of 137,000 bpd, according to insiders), some pundits thought it would nullify the impact of Western sanctions disrupting oil exports from Russia.