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Oil prices rise after Trump cancels Chevron Venezuela's licence

The oil price rose by more than 1.5% Thursday, as concerns about supply resurfaced following the revocation of a license granted to U.S. major Chevron for operations in Venezuela.

The gains were however capped by signs of an upcoming peace agreement in Ukraine that could lead to higher Russian oil flow and an unexpected increase in U.S. gas and distillate stock.

Brent crude oil futures rose $1.10 or 1.5% to $73.63 per barrel at 1413 GMT. U.S. West Texas Intermediate Crude Oil Futures rose by $1.14 or 1.7% to $69.76.

In the previous session, contracts settled at their lowest level since December 10.

Analyst Tamas Varga of PVM said, "Prices have stabilized this morning at their lowest levels in two months after Trump revoked Chevron’s licence to export Venezuelan crude oil."

Chevron will not be able export Venezuelan crude oil after the news of its licence. The sanctions imposed by the United States will prevent U.S. refineries from buying oil that was previously exported by Chevron.

"Chevron’s exit from Venezuela could reduce (oil) output, giving OPEC+ the capacity to increase production." If this happens, U.S. coastal refiners may face higher costs for procurement," TD Cowen analysts wrote in a report.

Analysts said that if OPEC+ doesn't increase the supply, heavy sour oil prices could rise, which would affect U.S. refiners.

Chevron's Venezuela operations export about 240,000 barrels of crude oil per day, which is more than one quarter of Venezuela's total oil production.

Trump's role in efforts to facilitate an agreement between Russia and Ukraine is also being emphasized.

Trump announced that Ukrainian President Volodymyr Zelenskiy will visit Washington on Saturday to sign an accord on rare earth minerals. However, the Ukrainian leader stated that the success of the talks would depend on the continued U.S. assistance.

"Markets prefer clarity to uncertainty. Varga said that unless a clear path on tariffs and Eastern European Peace is presented, oil prices will continue to be on the defensive.

The Energy Information Administration reported on Wednesday that U.S. crude stockpiles dropped unexpectedly as refining activity increased, and gasoline and distillate stocks registered surprising gains.

The government confirmed that the U.S. economy slowed down in the fourth quarter. This trend continued into the first quarter of this year, despite the cold temperatures and fears about tariffs increasing prices and affecting spending.

The number of Americans who are filing for unemployment benefits is increasing.

You can also increase your chances by increasing the number of people who you are able to contact.

Last week, more than anticipated. Separate unemployment programmes, which were reported with a week's delay, showed that the mass layoffs by federal government probationary workers had not yet affected them. Reporting by Yuka Obaashi in Tokyo, Siyi Lu in Singapore and Arunima Kumru Editing by David Goodman & Louise Heavens

(source: Reuters)