Published: Sun, April 14, 2019
Finance | By Loren Pratt

Oil Prices Jump Over 1 Percent Amid Tightening Supply

Oil Prices Jump Over 1 Percent Amid Tightening Supply

Oil markets are tightening amid the increasing effectiveness of US sanctions on Iran and Venezuela, the International Energy Agency said yesterday.

Crude oil markets are tightening, the International Energy Agency said Thursday, Kallanish Energy reports. This is 100,000 bpd lower than the call on its own crude.

Current oil demand stands around 100 million bpd.

Venezuela pumped 960,000 bpd in March, down nearly 500,000 bpd from February, OPEC said in a report on Wednesday.

"Oil prices at $70/bbl for Brent are less comfortable for consumers than they were at the start of the year", the reports says.

In its April report the IEA maintained its forecast for oil demand growth in 2019 at 1.4 million barrels per day.

According to the report, only time will tell if the EIA current demand forecast (1.4 mb/d) proves accurate, but the "risks are now to the downside".

OPEC and its allies led by Russian Federation are due to meet in Vienna on June 25-26 to set their policy.

Russian Federation is also ready to boost supplies.

The group forecasts USA crude production to rise by 1.46 million bpd in 2019 to 12.42 million bpd.

"The highest incremental production is expected in the Gulf Coast, albeit at a slower pace compared to a year ago due to the pipeline constraints in Permian Basin", it added. Turmoil in Libya and ongoing tension in Venezuela likely weighed positively on crude seeing that the two countries are major oil exporters.

Saudi Arabia's crude output fell 289,000 bpd in March to average 9.79 million bpd, according to an average of the six secondary sources that OPEC uses to gauge production.

Meanwhile, China's oil imports stood at 39.34 million tonnes or 9.26 million barrels per day (bpd) last month, the lowest since October 2018, official data showed today. It hit a session high of $64.65 earlier in a fresh attempt by long-oil hedge funds to reach the $65 target.

At the last OPEC meeting in Vienna, the group's members agreed to slash output by 812,000 bpd, with Russian Federation and nine other non-OPEC allies committing to a cut of 383,000 bpd for the first six months of 2019.

In Iran, hit by United States sanctions, output was slight down, falling 28,000 bpd to 2.70 million bpd in March. Though the rig count itself is a lagging indicator, with additional production showing up with a five-to-six-week latency after new drilling is reported, it is an important gauge to market participants trying to determine if USA output is surging again. OPEC said it had made some progress towards achieving this goal.

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