Sunday, 25 August, 2019

Oil Holds Gain as Saudi, Venezuela Supply Cuts Eclipse U.S. Boom

Crude Oil OPEC cuts & US sanctions against Iran and Venezuela boosting global crude prices
Ginger Lawrence | 14 February, 2019, 10:54

However, the Organisation of Petroleum Exporting Countries, OPEC, in its latest monthly oil report released on Tuesday, said Nigeria's oil production dropped to 1.687 million bpd in January from 1.797 million bpd.

US sanctions on Venezuela's state-owned oil company are tightening the global oil market and sending refiners around the world scrambling to find replacements for the country's diesel-rich heavy and extra heavy crudes.

U.S. prices were also supported by a report from the American Petroleum Institute (API) on Tuesday showing that crude inventories fell by 998,000 barrels in the week to 8 February to 447.2 million, compared with analyst expectations for an increase of 2.7 million barrels.

Growing U.S. supply and a potential economic slowdown this year could cap oil markets.

Markets were also supported by upbeat Chinese trade data, including for crude oil.

OPEC cut output by nearly 800,000 bpd in January to 30.81m bpd. "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.

U.S. West Texas Intermediate (WTI) crude oil futures were at $52.78 per barrel at 0329 GMT, up 37 cents, or 0.7 percent, from their last close.

At least 20 Guard personnel killed in Iran bombing
The attack happened in Iran's port city of Chabahar which has been emerging as economic hub between the regional countries. Jundallah, a Sunni extremist group whose members have joined Jaish al-Adl, claimed responsibility for that attack.

"In quantity terms, in 2019, the United States alone will grow its crude oil production by more than Venezuela's current output".

The combination of the OPEC-led production cuts, the increased reduction by the Saudis and in a limited way, the sanctions against Venezuela are helping to underpin prices, but in order to put the market over the top, demand is going to have to increase.

And while OPEC and its allies, including Russian Federation, withhold supply, U.S. output is expected to rise further, with the Energy Information Administration saying on Tuesday that United States crude production is expected to reach 13.2 million bpd by 2020.

Oil climbed for a second day as dwindling shipments from two of the world's biggest crude exporters eclipsed another big jump in USA supplies.

According to the agreement clinched in December, Saudi Arabia alone has reportedly reduced production of crude by almost 400,000 barrels per day to 10.24 million barrels.

Output has gone into free fall as the country's isolation has increased, shrinking from 2.4 million bpd in 2016 to 2.0 million bpd in 2017 and 1.5 million bpd in 2018, according to the Joint Organisations Data Initiative.