Oil prices edged up on Tuesday buoyed by expectations of tightening global supply due to US sanctions on Venezuela and production cuts led by OPEC.
OPEC, Russia and other non-OPEC producers - an alliance known as OPEC+ - agreed in December to reduce supply by 1.2 million barrels per day (bpd) from January 1.
But weighing on markets, United States government data showed new orders for US-made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.
US West Texas Intermediate (WTI) crude futures gained 43 cents, or 0.8 percent, to $54.09 a barrel after posting a session low of $52.86 a barrel.
At 447.2 million barrels, the EIA said, USA crude oil inventories are still above the seasonal average but not by much.
The head of state-run Kuwait Petroleum Corp, Hashem Hashem, said on Tuesday that global oil supply could be hit this year by big reductions in exports from Venezuela.
Brent crude futures were down 46 cents, or 0.7 percent, at $62.05 a barrel, off a high of $63.63. Bullish traders are banking on the Venezuelan oil sanctions and the OPEC-led production cuts to provide support.
The January decrease was the largest in the past 12 months as Opec cut production in response to falling oil prices. Many U.S. refineries are created to run heavier, sour grades of crude, a good portion of which comes from Venezuela.
"The collapse in oil prices late past year has resulted in more cautious spending by United States oil explorers", said Dhar.
"Fresh U.S. sanctions on the country could see 0.5-1 percent of global supply curtailed", said Vivek Dhar, mining and energy analyst, Commonwealth Bank of Australia.
Inventory data from the Energy Information Administration will be released later today.
Venezuela, like fellow OPEC members Iran and Libya, was exempt from production curbs under the deal on expectations that its output faced involuntary downward pressure in 2019.
Prices of the barrel of WTI are shedding around $3 since Monday's new YTD peaks near $55.60 amidst the re-emergence of speculations over a slowdown in global demand.
The global economic outlook and prospects for growth in fuel demand have been clouded by poor economic data in China and US-China trade tensions. These concerns, in combination with uncertainty in the US-China trade negotiations keep weighing on traders' sentiment.
US President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in coming weeks to try to settle the two countries' dispute.
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