Published: Mon, March 18, 2019
Markets | By Otis Pena

Crude futures reach four-month highs

Crude futures reach four-month highs

USA crude oil demand in 2019 is expected to rise by 360,000 barrels to 20.81 million barrels per day, a former Energy Information Administration (EIA) for an increase of 350,000 barrels per day.

After oil prices had a rollercoaster ride at the end of past year, OPEC+ agreed to cut production by 1.2 mbd in January to June.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are in a position to settle the week higher after hitting new highs for the year earlier in the week.

Moreover, US crude oil production fell modestly for the week ended March 8.

Other OPEC and non-OPEC nations have stepped in to plug the gap in Venezuela's shipments, of a similar quality crude, indicating that potential supply chaos would likely be averted but that supply was tightening. The group will discuss this at a meeting in April, although top exporter Saudi Arabia has said a decision may not be made until another gathering in June.

OPEC kept its world crude oil demand projections unchanged, stressing supply is increasing at a faster pace.

Production is expected to increase 1.35 million bpd compared to the previous year, but will grow more slowly than the previous forecast of 1.45 million bpd.

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It said a comfortable supply cushion by OPEC could prevent any price rally in case of possible disruptions and that non-OPEC oil output growth led by the United States should ensure demand is met. The reduction is created to cut any oil glut and prop up prices.

Still, oil prices could also come under downward pressure from an economic slowdown.

However, in the event of a major loss of Venezuelan supply, the Organization of the Petroleum Exporting Countries had about 2.8 million bpd of effective spare capacity, the IEA said.

But oil consumption has held up so far.

This week the EIA reported a fall of 3.9 MMbbls (million barrels) in U.S. crude oil inventories compared to a Reuters poll for a rise of 2.861 MMbbls for the week ended March 8.

OPEC, Russia and other non-member producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from January 1 for six months.

BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum: "Buyers with (Iran oil) waivers are likely going to hold back until there is more clarity in the United States administration's position".

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