Rising U.S. oil clout on show in Houston

Daniel Fowler
March 18, 2019

The Organisation of the Petroleum Exporting Countries (OPEC) and some non-aligned producers including Russian Federation have been withholding oil supply since the start of the year to tighten global markets.

Brent crude oil prices on Thursday hit their highest so far this year, pushed up by ongoing supply cuts led by OPEC and by USA sanctions against Venezuela and Iran.

At the Multi Commodity Exchange, crude oil for delivery in March was trading higher by Rs 12, or 0.3 per cent, to Rs 4,073 per barrel in a business turnover of 15,509 lots.

U.S. West Texas Intermediate (WTI) crude oil futures were at 58.58 dollars per barrel, also close to their last settlement and not far off their 2019-high of 58.74 dollars from the previous day.

Other OPEC and non-OPEC nations have stepped in to plug the gap in Venezuela's shipments, of a similar quality crude, indicating that potential supply chaos would likely be averted but that supply was tightening. "Even as Opec+ will probably send a message on output curbs at the ministerial meeting, they may not make a decision on it in April but June". Venezuela, which is in the middle of a political and economic crisis, saw production decline by 142,000 bpd in February.

"Tighter global inventories from OPEC-led supply cuts and".

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"With OPEC's cuts in full-swing ... persistent supply issues and a deteriorating picture on Venezuela, oil is looking well supported", said Jasper Lawler, head of research at futures brokerage London Capital Group.

The International Energy Agency yesterday reported that Opec's February crude production fell to a four-year low. OPEC announced in December it would be cutting production by 1.2 million bpd in 2019 to help balance the market in the near term.

But oil prices have been capped by concerns that an economic slowdown will soon start denting growth in fuel demand.

But oil consumption has held up so far. This might limit U.S. crude oil exports, which could increase global oil supply.

Goldman Sachs said growth in global demand for crude in January was "nearly 2.0 million barrels per day, with strength visible in both emerging markets and developed economies".

This week the EIA reported a fall of 3.9 MMbbls (million barrels) in United States crude oil inventories compared to a Reuters poll for a rise of 2.861 MMbbls for the week ended March 8.

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