Oil market monitors US-Venezuela relations

OANDA:BCOUSD   Brent Crude Oil
Oil prices struggle to resume the upside momentum on Thursday against the backdrop of stronger dollar demand, global growth slowdown worries, and the unexpected build up in US crude stockpiles. Brent lost nearly 1% yesterday and makes shallow recovery attempts around the $61 figure on Thursday.
There is a factor that caps the downside impetus in the oil markets however. The US-Venezuela diplomatic relations have worsened, which raises the probability that Washington will tighten the sanctions on the Venezuelan energy sector. This in turn could lead to some shortage of crude for a number of US refiners. In the longer term however, tighter restrictions could give the country’s energy sector a chance for a recover from the regime of Maduro.
As such, oil traders are focused on the developments on this front and should Trump deliver tighter sanctions, crude oil prices could jump amid supply concerns. But in the longer run, investor sentiment will further depend on dynamics in risk trades, US shale output activity, and the efficiency of OPEC+ deal.
Technically, Brent needs to stay above the $60 support in order not to lose the momentum and avoid a more aggressive profit-taking. A daily close above the $61 hurdle will re-open the way to a major resistance around $63, where the 2019 high lies.