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Oil prices fell on Wednesday after Donald Trump said Venezuela would hand over up to 50m barrels of sanctioned crude to the US.
Brent crude (BZ=F) futures dropped 0.8% to $60.23 a barrel, while West Texas Intermediate (CL=F) fell 1% to $56.52 at the time of writing.
The US president said the oil (BZ=F, CL=F) would be sold at market prices, a volume that would be worth about $1.9bn at current brent levels.
Trump wrote on Truth Social: “I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America.”
“This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!”
Read more: London falls and Europe mixed as Trump says Venezuela will send oil supply to US
In recent years, China has emerged as the largest buyer of Venezuelan crude, purchasing oil at well below market prices as Nicolás Maduro’s government sought to keep the economy afloat under international sanctions.
“This is confiscatory, imperialistic and there is no justification for it,” Jeffrey Sonnenfeld, a professor at Yale’s business school, told the Financial Times.
US officials have yet to set out a legal framework under which Venezuelan oil (BZ=F, CL=F) could be seized. The Trump administration has previously accused Venezuelan tankers of breaching US sanctions by shipping Iranian and Venezuelan crude.
Jim Reid, an analyst at Deutsche Bank, said the announcement lacked detail and may not signal a sustained shift. “There wasn’t much extra detail but this sort of volume is around 30 to 50 days of pre US blockade production so this could be the oil that has been sitting around and probably doesn’t mark the start of a trend,” he said.
Gold prices slipped on Wednesday as investors took profits after the metal briefly touched its highest level in more than one week, while a firmer US dollar weighed on sentiment.
Gold futures (GC=F) fell 0.5% to $4,474.60 an ounce, while spot prices were little changed at $4,471.83 at the time of writing. Prices remain less than $100 below last month’s record high of $4,548.92.
Market moves were being driven more by positioning than fundamentals, according to Kyle Rodda, senior financial markets analyst at Capital.com.
Prices are not being influenced “that much from a fundamental perspective, there’s a lot of speculation… price action has for the most part been skewed to the upside, but it’s showing two way volatility,” he said.
Rodda added that strength in the US dollar had also pressured prices. The currency hovered near its strongest level in more than two weeks, making dollar priced commodities more expensive for buyers using other currencies.
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Investors are now looking ahead to US economic data later in the week, including the closely watched nonfarm payrolls report due on Friday. The figures are expected to play an important role in shaping expectations for Federal Reserve policy.
Markets are currently pricing in two further interest rate cuts by the Fed this year, a backdrop that has generally supported gold (GC=F) by lowering the opportunity cost of holding assets that do not offer a yield.
Sterling was steady against its major peers on Wednesday as investors remained cautious ahead of a heavy slate of US economic data later this week, including jobs figures and purchasing managers’ indices.
The pound (GBPUSD=X, GBPEUR=X) was steady against the dollar at $1.3491 and versus the euro at €1.1541.
The currency held its ground as investors largely brushed aside recent market jitters linked to US military action in Venezuela over the weekend.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six major currencies, was up at 98.63.
Attention is now focused on US employment data for fresh signals on the Federal Reserve’s policy outlook. Economists expect the ADP report to show that private sector employers added 45K jobs, following a loss of 32K in November. Job openings, as measured by the JOLTS survey, are forecast at 7.64 million, broadly in line with October’s 7.67 million.
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Stronger signs of improvement in the US labour market would be likely to weigh on expectations for further interest rate cuts by the Fed in the near term, while weaker readings would reinforce bets on additional easing.
In equities, the FTSE 100 (^FTSE) on Wednesday was still trading above the 10,000 mark but down 0.4% at 10,084 points. For more details on market movements, check our live coverage here.
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