Oil futures fell sharply on Wednesday, breaking out of earlier trading in rangebunders, after the European Union soon introduced a mechanism that would allow companies to circumvent US sanctions and trade with Iran ,

The European Union is expected to introduce a mechanism to facilitate trade with third countries without trade and to circumvent US sanctions, Reuters reported Wednesday, citing comments from diplomats.

The introduction of the mechanism would allow the EU to marginalize US sanctions, but "this can be refuted by reports that the Trump administration is telling energy companies to prepare for sanctions against Venezuela," he said Phil Flynn, Senior Market Analyst at Price Futures Group.

The Trump government "could impose Venezuela's oil sanctions this week if the political situation continues to worsen there" Reuters Venezuela tweeted on Wednesdayciting sources.

West Texas Intermediate crude for March delivery

US: CLG9

fell 82 cents, or 1.6%, to $ 52.19 a barrel on the New York Mercantile Exchange. March Brent

LCOH9, -1.22%

ICE Futures Europe fell 83 cents, or 1.4%, to $ 60.67.

Oil futures had taken only modest steps on Wednesday before the reports. They found support after recent data pointed to a slowdown in shale production in the US, but was also beset by continued concerns over global crude oil demand.

Tuesday's prices came under pressure after the International Monetary Fund warned about global growth in 2019 and weak economic data from China, underscoring concern over global economic growth and energy demand.

However, the support did not come until late Tuesday from the data immediately before the comparison. In February, the Energy Information Administration predicted that shale oil production would increase by 62,000 barrels per day to 8.179 million barrels per day. The agency had more than doubled in December compared to December.

The price of oil has risen by around 20% since reaching its highs in the last week of December, largely due to the upturn in global stock prices. The production cuts in the organization of the oil-exporting countries and their allies were largely behind this market movement. OPEC and ten non-oil cartel producers, led by Russia, agreed at the end of 2018 to collectively hold crude oil production at 1.2 million barrels per day in the first half of 2019 to limit supply and raise prices.

Read: This really worries investors about China's slowdown

The American Petroleum Institute publishes weekly data on US oil stocks late Wednesday, followed by official data on the EIA on Thursday. Both come one day later than usual because Martin Luther King jr.

Analysts interviewed by S & P Global Platts estimate that the EIA for the week ending Jan. 18 will decrease inventories by 600,000 barrels and increase supply by 2.9 million barrels for gasoline and 900,000 Barrel for distillates will report.

Fuel oil at Nymex in February

HOG9, -0.85%

fell 1.3% to $ 1.876 a gallon while gasoline in February

RBG9, -1.68%

lost 2.2% to $ 1,371 per gallon.

In the other energy trade in February natural gas

NGG19, -1.05%

The value dropped 0.8% to $ 3.102 per million UK thermal units, after trading at $ 3.167. Due to changing weather forecasts, volatility remained high.

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