Oil prices pared gains on Thursday afternoon following a Reuters report that the Trump administration is likely to allow Chevron to resume operations in Venezuela.

Brent crude futures rose 26 cents, or 0.38%, to $68.77 per barrel at 1:14 PM CDT (6:14 PM GMT). U.S. West Texas Intermediate crude futures rose 44 cents, or 0.67%, to $65.69 per barrel. Earlier in the session, WTI had risen more than a dollar, and Brent crude was near that level.

"The news that Chevron could return to Venezuela and restore oil production really shook the market," said John Kilduff, a partner at Again Capital LLC. Kilduff said the market did not expect the Trump administration to open Venezuela to other U.S. oil companies. "This is a unique, unexpected event," he said.

Oil prices rose amid news that Russia plans to cut gasoline exports to all countries except a few allies and countries, including Mongolia, with which Russia has a supply agreement. "Russia's willingness to cut gasoline exports is providing a boost to the market," said Phil Flynn, senior analyst at Price Futures Group. "The market is looking for a reason to rally."

Earlier in the trading session, oil futures rose following the previous day's report of a drawdown in US crude inventories and hopes for a trade deal between the US and the European Union that would lower tariffs. "The drawdown in US crude inventories and these trade efforts are adding support to prices," said Janiv Shah, an analyst at Rystad.

On Wednesday, two European diplomats said that the EU and the US are moving toward a trade deal that could include a 15% US base tariff on EU imports and possible exemptions. This could pave the way for another major trade agreement after the Japan deal.

On Wednesday, US Energy Information Administration (EIA) data showed crude oil inventories fell by 3.2 million barrels last week to 419 million barrels, far exceeding analysts' expectations in a Reuters poll for a draw of 1.6 million barrels.

Oil prices were also supported by the suspension of Azerbaijani crude exports from the Turkish port of Ceyhan and the temporary halt in loadings at key Russian ports on the Black Sea, which have since been resolved. BP said organic chlorides were detected in some oil tanks at the Ceyhan terminal, adding that oil loadings were continuing from some tanks with chloride levels assessed to be within normal specifications, while export activity through the BTC pipeline also continued.

Traders will be closely watching for further news on loadings from Ceyhan and Novorossiysk, which together account for about 2.5% of global oil supply at 2.5 million barrels per day, according to Reuters calculations based on loading data from the region.

Russia and Ukraine held peace talks in Istanbul on Wednesday, discussing further prisoner exchanges, although the two sides remain deeply divided over the terms of a ceasefire and a possible meeting of their leaders. (alg)

Source: Reuters