Brent crude futures closed down 74 cents, or 1.2%, at US$59.96 a barrel, while US West Texas Intermediate crude fell US$1.14, or 2%, to US$55.99 a barrel.
HOUSTON: Oil prices settled lower for a second straight session on Wednesday as investors digested US President Donald Trump's deal to import up to US$2 billion worth of Venezuelan crude, a move that would lift supplies to the world's largest oil consumer.
Brent crude futures closed down 74 cents, or 1.2%, at US$59.96 a barrel, while US West Texas Intermediate crude fell US$1.14, or 2%, to US$55.99 a barrel. Both benchmarks slid more than US$1 a barrel during the previous trading session, with market participants expecting ample global supply this year.
Venezuela will be "turning over" between 30 million and 50 million barrels of "sanctioned oil" to the US, Trump wrote in a social media post on Tuesday.
The deal between Washington and Caracas initially could require the rerouting of cargoes that were bound for China, sources told Reuters.
"Crude futures continuing on the defensive after the late day sell-off yesterday on news that Venezuela will be giving the US between 30 to 50 million barrels of oil," said Dennis Kissler, senior vice president of trading at BOK Financial.
Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship since mid-December due to a blockade on exports imposed by Trump. The blockade was part of a US pressure campaign against Venezuelan President Nicolas Maduro's government that culminated in US forces capturing him over the weekend.
Top Venezuelan officials have called Maduro's capture a kidnapping and accused the US of trying to steal the country's vast oil reserves.
The US also seized an empty Russian-flagged, Venezuela-linked oil tanker in the Atlantic Ocean on Wednesday.
Providing some support to prices, US crude stocks dropped by 3.8 million barrels to 419.1 million barrels in the week ended January 2, the Energy Information Administration said.
Analysts had estimated a rise of 447,000 barrels.
US gasoline stocks increased by 7.7 million barrels in the week, the EIA said, compared with analysts' expectations in a Reuters poll for a build of 3.2 million barrels.
Distillate stockpiles, which include diesel and heating oil, climbed by 5.6 million barrels in the week versus expectations for a rise of 2.1 million barrels.
Morgan Stanley analysts estimated the oil market could reach a surplus of as many as 3 million barrels per day in the first half of 2026, based on weak growth in demand last year and rising supply from Opec and non-Opec producers.
However, the prospect of higher, cheaply extracted Venezuelan oil exports could pause expansion of productive capacity in the US and elsewhere, analysts at BMI, a unit of Fitch Solutions, said in a note on Wednesday.
Venezuela has been selling its flagship Merey crude grade at around US$22 per barrel below Brent for delivery at its ports.
"That raises the expected price of oil over the medium term, especially if the Venezuelan regime survives," the BMI analysts said. — Reuters
