"China trade talks, ignoring the risks now in place from the loss of Venezuelan barrels", USA bank J.P. Morgan said in a weekly note. Since January 1, an OPEC-led group has been cutting at least 1.2 million barrels per day from production in an effort to trim the global supply and stabilize prices.
The global oil market will struggle this year to absorb fast-growing crude supply from outside the Organization of the Petroleum Exporting Countries, even with the group's production cuts and USA sanctions on Venezuela and Iran, the International Energy Agency said in a report on Wednesday.
While US crude production is expected to grow by an amount that exceeds Venezuela's current output, the IEA warned that quantity is not the only important issue.
However, analysts are warning that record USA supply and anticipated economic slowdown later this year might start capping the world's oil markets.
The IEA noted that new U.S. sanctions announced in January on Venezuela's state oil company PDVSA have not so far caused market jitters.More news: Spurs boss hails Spurs ‘heroes’ after Dortmund triumph
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The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly.
The ongoing closure of parts of the Keystone pipeline that brings Canadian oil into the United States also helped prop up WTI, traders said.
Despite the political rifts between Venezuela and the United States, US refiners have in the past been some of the biggest buyers of Venezuelan crude. Analysts were looking for a build of about 2.300 million barrels.
The March production figure means Saudi would be voluntarily cutting output by more than 500,000 bpd below its pledged production level under a deal between the Organization of the Petroleum Exporting Countries and allies led by Russian Federation.
Most new supply is coming from the United States, where crude production rose by more than 2 million bpd a year ago to a record 11.9 million bpd, making the country the world's biggest oil producer ahead of Russian Federation and Saudi Arabia.
In effect, sanctions have shifted the balance of global oil production in the direction of lighter crudes, at the same time that the economy and forthcoming regulations are pushing refinery demand towards heavier grades.