USA crude stockpiles surge to 17-month high; steep gasoline drawdown

Daniel Fowler
April 11, 2019

Brent crude futures, the worldwide benchmark for oil prices, were up $1.04, or 1.5%, at $71.65 per barrel around 2:30 p.m., after hitting a five-month high.

Both benchmarks hit five-month highs on Tuesday, before easing on global growth worries.

Oil markets have tightened this year because of US sanctions on oil exporters Iran and Venezuela, as well as supply cuts by OPEC and some non-affiliated producers including Russian Federation, a group known as OPEC.

Another factor that pushed up crude oil prices today was the monthly report from OPEC that showed Venezuela's oil output dropped to a long term low of below 1 million barrels per day last month, due largely to US sanctions and power shortages.

A supply cut led by the OPEC (Organization of Petroleum Exporting Nations), a 14-nation pact of oil exporting nations headquartered in Vienna, had resulted in a rally of more than 30 percent this year for the United Kingdom crude despite steep economic slowdown.

An OPEC monthly report released on Wednesday showed that Venezuela's oil output sank last month to a long-term low below 1 million barrels per day, due to USA sanctions and blackouts.

In the United States, crude oil production has risen by more than 2 million bpd since early 2018, to a record 12.2 million bpd, with many analysts expecting output to exceed 13 million bpd soon.

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"Declines from these two exempt countries account for nearly 47% of the reduction seen from OPEC", ING added.

Despite the OPEC-led cuts and US sanctions, not all regions are in tight supply.

In the USA crude production reached a global record 12.2 million bpd in late March.

According to the Department of Energy, America's stores of commercial crude oil rose by 7.0m barrels over the week ending on 5 April to reach 456.5m barrels (consensus: 2.3m b/d), leaving them at their average level of the past five years.

"WTI has not seen the same strength (as Brent). given the relatively more bearish fundamentals in the USA market", said ING bank.

On Tuesday, crude oil futures for May ended down $0.42, at $63.98 a barrel, after rising to a high of $64.79.

In its third downgrade since October, the International Monetary Fund said the global economy will likely grow 3.3 percent this year, the slowest expansion since 2016.

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