Oil prices lower as inventory build only modest

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Meanwhile, imports are set to drop further as the USA slapped sanctions on Venezuelan state oil company PDVSA.

On the positive side and somewhat limiting occasional dips, crude oil prices remain supported by the ongoing OPEC+ deal to curb production, supply disruptions from Venezuela and Libya and the continuation of United States sanctions against Iranian exports.

Venezuela's opposition is opening a USA fund to receive the proceeds of oil sales, a key measure to secure revenue for its effort to dislodge Maduro, an opposition lawmaker said on Wednesday.

On Wednesday, the EIA reported that for the week ended February 1 that US commercial crude oil inventories increased by 1.3 million barrels from the previous week.

U.S. West Texas Intermediate (WTI) crude futures were at $53.82 per barrel at 0036 GMT, down 19 cents, or 0.35 percent, from their last settlement.

Technically, the crude oil price remains within the rising channel in place on the chart throughout this year so far and its climb could well extend towards the channel resistance line, now around $56.30.

US crude inventories rose by 2.5 million barrels last week, the American Petroleum Institute said on Tuesday.

"The price has yet to react in any noticeable way", Fritsch said of the sanctions.

According to a separate report by FXDailyReport analyst Katrina Ang, analysts expectations were for an inventory expansion of up to 2.2 million barrels.

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A decline in OPEC production and a squeeze on supply from Iran and Venezuela from USA sanctions have led many analysts to forecast that the market will be balanced in 2019.

Washington said last week that after April 28 foreign companies would not be able to conduct business with Venezuelan state-run oil firm PDVSA using the US financial system, effectively banning them from paying in USA dollars.

Concern about weaker global economic growth and the trade dispute between the United States and China have also weighed on sentiment.

US inventories of winter fuels, including propane, shrank by about 4.9 million barrels combined last week, EIA data showed Wednesday.

The oil price is showing a 20 percent gain so far this year.

While WTI crude future prices rose 0.7 percent on Wednesday, crude oil prices are down from $55.26 per barrel on Friday, its highest level for the year.

"The global oil supply/demand balance could shift from a current significant surplus to zero at the end of the year", Jean-Pierre Durante, an analyst at Pictet Wealth Management, wrote in a report, if producers comply with the decision and extend it until December.

US President Donald Trump said in his State of the Union address that a trade deal was possible with China. Prices are likely to remain rangebound, or drift sideways to lower until the USA and China reach a trade deal.

OPEC, and some non-OPEC countries led by Russian Federation, had agreed to remove 1.2 million barrels of crude oil per day from the market starting January 1 to help crude prices increase.