Published: Thu, February 14, 2019
Finance | By Loren Pratt

Nigeria’s crude oil production falls to 1.999m bpd

Nigeria’s crude oil production falls to 1.999m bpd

The global oil market will struggle this year to absorb fast-growing crude supply from outside the Organization of the Petroleum Exporting Countries (OPEC), even with the group's production cuts and USA sanctions on Venezuela and Iran, the International Energy Agency said in a report on Wednesday.

Venezuela's heavy crudes, such as Merey, have few close substitutes, with the nearest being grades such as Brazil's Marlim, Mexico's Maya, Canada's Bow River and Cold Lake, or Iraq's Basra Heavy.

The rapid growth in U.S. 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.

Venezuela sanctions have arrived in a market that was already likely to be short of medium and heavy crudes because of US sanctions on Iran and OPEC's output cuts.

TransCanada is beginning fix and restoration work on the Keystone crude oil pipeline following an oil spill, a spokesman said Wednesday.

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

Mars, a medium crude grade from the U.S. Gulf, has moved to a rare premium over Louisiana Light Sweet.

Nigeria, Africa's largest oil producer has $60 per barrel oil benchmark for this year's budget.


A U.S. House of Representatives committee approved the bill known as No Oil Producing and Exporting Cartels Act, or NOPEC, last week.

Saudi Arabia will reduce oil production to nearly 9.8 million barrels per day in March, Minister of Energy, Industry and Mineral Resources and Chairman of Saudi Aramco Khalid Al-Falih told the Financial Times.

Production has been hampered by corruption, political interference and lack of foreign investment and technology to maintain existing fields and develop new ones.

"The imposition of sanctions by the United States against Venezuela's state oil company Petroleos de Venezuela (PDVSA) is another reminder of the huge importance for oil of political events", the IEA said. Analysts were looking for a build of about 2.300 million barrels.

The IEA also raised its estimate for the increase in non-OPEC crude supply in 2019 to 1.8 mbd, which is 0.3 mbd higher than previously. In another bullish sign this week, President Donald Trump struck a conciliatory tone on trade talks with China, suggesting higher tariffs might be averted.

Sanctions announced last month prohibit US corporations and persons from financial transactions with state-owned oil company PDVSA.

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

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