Western Canadian Select crude's discount to futures narrowed $1.75 to $9.25 a barrel on Wednesday amid the possible imposition of U.S. sanctions on Venezuelan crude, which is similar to heavy Canadian oil and competes with it on the U.S. Gulf Coast.
A year ago, the U.S. government saw American crude production averaging 11.95 million barrels per day (bpd) in 2042.
Brent crude oil futures were at $61.62 a barrel, 53 cents above their last close.
The driver of Friday's trading activity was said to be the USA signalling that it may impose sanctions on Venezuelan exports after recognizing opposition leader Juan Guaido as interim president this week, prompting president Nicholas Maduro to cut ties with Washington.
Venezuelan President, Nicolas Maduro, has struck back against his opponents, winning strong support from the country's armed forces and the solid backing of Russian Federation, which warned the United States not to intervene. The perception of oil's supply-demand imbalance likely worsened as world leaders voiced concerns over the slowing global economy in Davos, which could have contributed to the drop in oil prices early in the week.
Venezuelan oil is predominantly heavy crude, which requires extensive refining.
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The U.S. also threatened to impose sanctions on Venezuela's oil industry that could further hobble the country's exports. Prices have risen around 25% from a late December low.
Although, it is worth pointing out that if the US-China trade war talks do not make any headway, sentiment could quickly sour and cause fears over slowing economic growth to resurface.
Gasoline stocks rose for the eighth straight week to a record 259.7 million barrels, as demand for the fuel over the past four weeks fell 0.1% from a year ago. Even without such measures, Venezuelan production is expected to continue to fall as debt-burdened PDVSA is unable to reinvest in its oil fields or infrastructure and has lost many of its most experienced technical staff under its military management. Distillate stockpiles decreased by 0.62 million barrels, compared to estimates for a decline of 0.23 million.
Mr. Monaldi said the US imports account for 80 per cent of PDVSA's revenue.
However, the wealth and luck that should have been brought by Venezuela's huge oil reserves, has been affected by political unrest in recent years. Venezuela also imports 150,000 b/d of petroleum product from the United States, including 75,000 barrels of diluent - a light hydrocarbon that is used to dilute bitumen so it can be transported in pipelines.
