By Stephanie Kelly
NEW YORK (Reuters) -Oil prices rose 2% on Thursday as supply concerns resurfaced after U.S. President Donald Trump revoked a licence granted to U.S. oil major Chevron to operate in Venezuela.
Gains were capped, however, by signs of a potential peace deal in Ukraine, which could result in higher Russian oil flows, and an unexpected rise in U.S. gasoline and distillate stocks.
Brent crude oil futures were up $1.43, or 2%, at $73.96 a barrel by 11:00 a.m. EST (1600 GMT). U.S. West Texas Intermediate crude oil futures rose $1.46, or 2.1%, to $70.08.
The contracts had settled in the previous session at their lowest since December 10.
"Markets like clarity as opposed to uncertainty. Unless a clear path is presented on tariffs and Eastern European peace, oil prices will remain on the defensive with sporadic and spontaneous headline-based rallies," said PVM analyst Tamas Varga.
The Chevron licence news means the company will no longer be able to export Venezuelan crude. And if Venezuelan state oil company PDVSA exports oil previously exported by Chevron, U.S. refineries will be unable to buy it because of U.S. sanctions.
The cancellation of Chevron's license also could lead to the negotiation of a fresh agreement between the U.S. producer and state company PDVSA to export crude to destinations other than the United States, sources close to the talks told Reuters.
"Chevron's exit could reduce Venezuela (oil) production, giving OPEC+ capacity to increase output. If this occurs, coastal U.S. refiners could incur higher procurement costs," TD Cowen analysts said in a note.
If OPEC+ does not increase supply, it could increase heavy sour prices, which would hit U.S. refiners, the analysts said.
Chevron exports about 240,000 barrels per day (bpd) of crude from its Venezuela operations, more than a quarter of the country's entire oil output.
Trump's involvement in efforts to facilitate a Russia-Ukraine peace deal is also in focus.
Trump said Ukrainian President Volodymyr Zelenskiy would visit Washington on Friday to sign an agreement on rare earth minerals, though the Ukrainian leader said the success of talks would hinge on continued U.S. aid.
U.S. crude oil stockpiles fell unexpectedly last week as refining activity ticked higher, while gasoline and distillate inventories registered surprising gains, the Energy Information Administration said on Wednesday. [EIA/S]
U.S. economic growth slowed in the fourth quarter, the government confirmed on Thursday, and the loss of momentum appears to have persisted early this quarter amid cold temperatures and concerns that tariffs will hurt spending through higher prices.
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Meanwhile, the number of Americans filing new applications for unemployment benefits increased more than expected last week. A separate unemployment programme, reported with a one-week lag, showed no impact yet of the recent mass layoffs of probationary federal government workers.
(Reporting by Stephanie Kelly in New York, Yuka Obayashi in Tokyo, Siyi Liu in Singapore and Arunima KumarEditing by David Goodman, Louise Heavens and Chizu Nomiyama)
