Oil prices climbed strongly on Thursday, recovering from two consecutive declines after fresh data showed a larger-than-expected drop in U.S. crude inventories, even as developments around Venezuela continued to dominate market attention.
By 07:50 ET (12:50 GMT), Brent crude futures for March delivery were up 1.6% at $60.93 per barrel, while U.S. West Texas Intermediate crude also gained 1.6% to $56.90 per barrel. Both benchmarks had fallen by more than 1% in each of the previous two sessions.
U.S. inventories post biggest drop since October
Market sentiment was supported by official U.S. figures released on Wednesday showing that crude oil inventories fell by 3.8 million barrels in the week to January 2. This was well above market expectations for a 1.2 million barrel decline and marked the largest weekly draw since late October.
The fall was also nearly double the 1.9 million barrel reduction recorded the previous week, reinforcing confidence that demand in the world’s largest fuel-consuming economy remains resilient.
Venezuela remains central to market narrative
Despite the inventory-driven rebound, geopolitical risk linked to Venezuela remained firmly in focus. According to a report from the Wall Street Journal, U.S. President Donald Trump is planning a multi-year strategy to exert control over Venezuela’s oil industry, as part of efforts to achieve his stated $50-a-barrel oil price goal.
The report said the administration is considering taking control of the state-owned oil company Petróleos de Venezuela SA (PdVSA). Trump said on Tuesday that Venezuela would transfer between 30 million and 50 million barrels of oil to Washington—worth up to $3 billion—just days after U.S. forces captured Venezuelan President Nicolas Maduro.
Trump has also been seen encouraging U.S. oil producers to establish operations in Venezuela, with Chevron (NYSE:CVX) emerging as a leading participant. Reuters reported that Chevron is in talks to expand its operating license in the country. Chevron is currently the only major U.S. oil company active in Venezuela and operates under a special government authorization that exempts it from strict sanctions.
Commenting on the situation, analysts at ING said: “The U.S. Department of Energy said the U.S. has already begun marketing Venezuelan oil globally, while Trump’s energy secretary stated that the U.S. intends to control future sales of Venezuelan oil indefinitely. This intent to control Venezuelan oil exports is also clear with the blockade on sanctioned tankers still in place. In fact, the U.S. seized two further tankers yesterday.”
They added that “The control that the U.S. intends to exert over the Venezuelan oil industry also raises questions over the future of Venezuela’s membership within OPEC.”
While a sharp rebound in Venezuelan production could eventually add to global supply—heightening concerns over a potential oil glut in 2026—analysts caution that any increase is likely to take time, given the country’s political instability following the U.S. intervention. The Financial Times reported that U.S. energy companies are seeking “serious guarantees” from Washington before committing capital to Venezuela.
Payrolls data awaited
Beyond geopolitics, traders are also preparing for a series of key U.S. economic releases, led by Friday’s nonfarm payrolls report for December. The data is expected to play an important role in shaping interest rate expectations.
Lower interest rates typically support fuel consumption by stimulating economic activity, which in turn can lift energy demand in the world’s largest economy.