Global oil supply falls in January '19: OPEC

14 February, 2019, 07:55 | Author: Mary Valdez
  • Opec oil production falls as Saudi Arabia slashes output

In the Organization of Economic Co-operation and Development (OECD), oil demand was revised down by 0.02 mb/d due to lower economic projections for OECD Americas in 1Q19 and OECD Europe for the whole of 2019, reads the report.

U.S. West Texas Intermediate (WTI) crude oil futures were at $52.69 per barrel at 0751 GMT, up 28 cents, or 0.5 percent, from their last close.

The EIA raised its forecast of 2019 USA oil production by 340,000 barrels a day, with more than a third of that coming from the Gulf of Mexico and the increase heavily skewed to the second half of the year.

"The worries of oversupply stemming from the USA will likely remain a dominant theme as we approach the warmer months", said Edward Moya, market analyst at futures brokerage OANDA.

"It's a little bit on the bearish side", Saal said. "Saudi Arabia, are intending to push more barrels into the market to offset shortfalls" of heavier grades of crude, the IEA warned.

Saudi's Energy Minister Khalid al-Falih announced the move in an interview with the Financial Times published Tuesday, as the kingdom seeks to drive up oil prices to help fund an economic transformation plan.

The Organization of the Petroleum Exporting Countries said on Tuesday that it had cut its output by nearly 800,000 barrels per day (bpd) in January to 30.81 million bpd.

Under the deal, which came into effect at the start of 2019, Saudi Arabia - largest OPEC producer - aims to produce 10.311 million bpd.

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"The feel-good factor is back in play but oil bulls are by no means out of the woods yet", PVM Oil Associates Stephen Brennock said. "China trade talks, ignoring the risks now in place from the loss of Venezuelan barrels", USA bank J.P. Morgan said in a weekly note.

USA restrictions on Venezuela's energy sector should remove some 330,000 bpd in supply this year, according to Goldman Sachs.

The IEA noted that new USA sanctions announced in January on Venezuela's state oil company PDVSA have not so far caused market jitters.

"Initial production and supply data from participating countries is beginning to show various levels of conformity, as can be viewed in OPEC's latest Monthly Oil Market Report".

"In quantity terms, in 2019, the U.S. alone will grow its crude oil production by more than Venezuela's current output". "Crude-oil quality is another issue, and, in the wider context of supply in the early part of 2019, it is even more important".

US crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the EIA.

Should U.S. -China talks succeed, the U.S. bank said oil markets would "switch attention from macro concerns impacting future demand growth to physical tightness and geopolitical risks impacting immediate supply".

Refining profits for gasoline have plunged since mid-2018, going negative in Asia and Europe, amid tepid demand growth and a surge in supply.

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