Published: Fri, March 15, 2019
Markets | By Otis Pena

Crude oil gains as US cuts crude production outlook

Crude oil gains as US cuts crude production outlook

The report came on the same day that Secretary of State Mike Pompeo was due to meet with senior US oil executives at the CERAWeek by IHS Markit conference in Houston to discuss boosting crude exports and advancing America's position as a global energy powerhouse, according to people with knowledge of the meeting.

At the time of writing, Brent crude traded at US$67.29 a barrel, with WTI at US$57.85 a barrel.

Oil has rallied more than 25% so far this year in NY as the Organization of Petroleum Exporting Countries and its allies show commitment to their deal to reduce production and as output in Venezuela declines.

The IEA's forecast came just a few weeks after the U.S. exported a record 3.6 million barrels of crude oil on a daily basis, with the country being also a major exporter of petroleum products including refined fuels.

The American Petroleum Institute (API) on Tuesday reported a drop of 2.58 million barrels in the US crude oil inventories for the week ending March 8.

In Venezuela, the worst blackout on record has left most of the South American country without power for six days, leaving hospitals struggling to keep equipment running, food rotting in the tropical heat and exports from the country's main oil terminal stranded.

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In the near term, the latest reports on USA inventories are expected to show a rise in crude stocks. Distillate fuel inventories gained a modest 400,000 barrels, after falling by 2.4 million barrels in the last week of February.

The API also reported a huge draw in gasoline inventories of 5.8 million barrels for the week-ending March 8.

"The United States accounts for 70 percent of the total increase in global capacity to 2024, adding a total of four mb/d (million barrels per day)".

The EIA's (U.S. Energy Information Administration) STEO (Short-Term Energy Outlook) report released on March 12 estimated a small fall in USA crude oil production in February on a month-over-month basis.

In Venezuela, oil production and exports have been disrupted by a political and economic crisis that has caused massive blackouts and supply shortages, while Washington has barred US companies from doing business with the Venezuelan government, including state-owned oil firm PDVSA.

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