Published: Sun, June 16, 2019
Markets | By Otis Pena

United States crude oil production decreases, EIA says

United States crude oil production decreases, EIA says

The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude production on Tuesday. That compared with analysts' expectations for a decrease of 481,000 barrels.

The takeaway from this is easily summed up by a recent CNBC article entitled, Oil Steadies as OPEC Supply Cuts Counter Growth Concerns as follows: "While the talk of prolonged supply restraint is supporting prices, concern about slowing demand and economic growth has had a bigger impact on sentiment". Some members are anxious about a steep slide in prices, despite demands from U.S. President Donald Trump for action to lower the cost of oil.

According to the EIA, U.S. crude oil production averaged 12.3 million barrels per day (b/d) last week, down by 100,000 b/d from the previous week and up by about 1.4 million b/d year on year.

The government is likely to revise prices of petroleum products by Rs5 as oil prices in the global market tumbled, reporting a significant decrease of $11 per barrel in crude oil prices within the last two weeks.

Brent crude futures were up $1.09, or 1.8%, at $61.06 by 11:11 a.m. CST (1611 GMT), having risen as much as 4.5% to $62.64.

Stocks in April exceeded the five-year average - a yardstick OPEC watches closely - by 7.6 million barrels. OPEC and the International Energy Agency are scheduled to update their demand outlook on Thursday and Friday, respectively.

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OPEC countries and non-member producers including Russian Federation, have limited their oil output by 1.2 million barrels per day this year to prop up prices.

Goldman Sachs stated in a note that OPEC might extend the supply cuts due to the uncertain macroeconomic future and volatile oil production from Iran among others.

The group said it must weigh a potential slowdown in global economic activity against geopolitical supply risks.

"From an effective production perspective, we expect that core-OPEC will continue to balance the market by responding to consumer demand, and if needed produce below or above its targets, as already exhibited during the?rst?ve months of the year". According to the Oil & Gas 360 article, stockpiles are now at their highest level since mid-2017 and this oversupply is present "amid slower demand growth".

EIA forecast global oil inventories will decline by 0.3 million barrels per day (b/d) in 2019 and then increase by 0.3 million b/d in 2020.

Earlier this week, FGE also reduced its global oil demand growth outlook by 300,000 million bpd to 1 million bpd.

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