Oil rises after Saudi output pledge, declining USA inventories

Daniel Fowler
February 14, 2019

Oil prices rose on Thursday, buoyed by hopes that potential progress in the latest Sino-U.S. tariff talks would improve the global economic outlook, and as China's trade figures including crude imports beat forecasts.

International Brent crude futures were up 1 percent, or 65 cents, at $63.07 per barrel.

Oil prices rose on Wednesday as producer club Organisation of the Petroleum Exporting Countries (OPEC) said it had cut supply deeply in January and as U.S. sanctions hit Venezuela's oil exports.

Analysts say a rise in oil prices is good for the country that sank into recession previous year as a result of sharp dip in oil prices.

Futures in NY closed up 1.5 percent, reaching the highest point in a week.

But the country's oil industry has been in relative and absolute decline for the last 50 years as problems of producing and marketing its heavy crudes have been compounded by an unattractive investment regime and mismanagement.

While yesterday's jawboning from OPEC continues to keep the oil complex bid.

The OPEC's 14 members pumped 30.81 million bpd in January, down from 31.60 million bpd in December, according to its Monthly Oil Market Report.

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The ongoing closure of parts of the Keystone pipeline that brings Canadian oil into the United States also helped prop up WTI, traders said.

"This is because, in terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations", the group added.

The IEA raised its estimate of growth in crude supply from outside the Organization of the Petroleum Exporting Countries to 1.8 million bpd in 2019, from 1.6 million bpd previously.

In the meantime, the political rift between Venezuela and the United States continues with the USA sanctions against the South American nation giving prices a slight boost.

The IEA further added that traders shouldn't expect USA sanctions against Venezuela to fuel a rally in oil prices.

Crude inventories built for a fourth week in a row, rising 3.6 million barrels to 450.8 million barrels in the week to February 8. Analysts polled by Reuters forecast an increase of 2.7 million barrels.

The rapid growth in United States production, led by shale oil output, has led to an unwelcome build-up in inventories of crude and refined products while refining margins for the gasoline it yields have collapsed around the world.

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