Investing.com - A short-lived drop in rigs and record gasoline stockpiles aren't deterring oil bulls, who continue counting on the possibility of U.S. sanctions on Venezuelan oil to take the market higher.
New York-traded West Texas Intermediate and London's Brent crude were both up about 1% after oil services firm Baker Hughes reported a rise of 10 U.S. oil rigs this week, versus last week's drop of 21.
WTI settled up 53 cents, or 1%, at $53.69 per barrel.
Brent, the global oil benchmark, climbed by 47 cents, or 0.8%, to $61.56 by 2:45 PM ET (18:45 GMT).
For the week, WTI was down about 0.3 % while Brent showed a decline of nearly 2%.
Oil prices have been mixed this week, initially tumbling on weak Chinese and global data and concerns about the U.S. oil stockpiles, before being supported by fears that the U.S. could slap sanctions against Venezuelan oil in retaliation against President Nicholas Maduro's decision to sever diplomatic ties with Washington.
The rig count from Baker Hughes is crucial to determining whether output of U.S. shale crude, which has been responsible for two supply gluts in global oil markets the past four years, is slowing (at least in the near term).
Last week's drop of 21 U.S. oil rigs took traders by surprise, accelerating prices gains in a market already charging higher on OPEC's aggressive campaign to publicize its production cuts. But while last week's slide was the sharpest in nearly three years, the 862 oil rigs deployed as of this week is still higher than the year-ago level of 747.
In its weekly supply-demand update published on Thursday, the U.S. Energy Information Administration announced a larger-than-expected build of 4.05 million barrels in gasoline stockpiles to a record high 259.6 million barrels. Analysts had only expected a gasoline build of 2.66 million barrels last week.
Crude inventories rose by 7.97 million barrels in the week to Jan. 18, compared to forecasts for a stockpile draw of 0.042 million barrels, the EIA said.
Inventories of distillates, which produce diesel and other commercial fuels, decreased by 0.62 million barrels, compared to forecasts for a decline of 0.23 million.
As for Venezuela, the U.S. has drafted a slate of potential restrictions on the Latin American nation's crude exports, but hasn’t decided whether to deploy them, said people familiar with the matter. The crisis in Caracas could expedite OPEC’s goals of balancing the supply-demand in oil and boosting crude prices or risk market havoc.
But analysts doubt the Trump administration would go ahead with the sanctions as they could starve U.S. refineries of Venezuela's sour-grade oil, which is crucial for producing diesel, jet and other commercial fuels, compared to WTI's sweet grade meant for gasoline.
Prices of crude and all fuels could also surge as a result of the sanctions, something President Donald Trump would particularly dislike, analysts say.