Saudi crude output to fall to 9.8 million bpd in March: Falih

Mae Love
February 14, 2019

The world's largest oil producers slashed their crude production last month as global economic jitters drag on oil demand forecasts.

Brent crude futures have risen 20 percent in 2019 to around $63 a barrel, but most of that increase took place in early January.

The Organisation of Petroleum Exporting Countries (Opec) said it tightened its crude taps to cut nearly 800,000 barrels a day from its oil exports in January after vowing to drain excess oil from the oversupplied market.

OPEC cut its forecast for 2019 world oil demand on Tuesday due to slowing economies and expectations of faster supply growth from rivals, underlining its challenge to prevent a surplus even as it starts new production cuts.

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U.S. West Texas Intermediate (WTI) crude futures were at $54.16 per barrel at 0413 GMT, up 26 cents, or 0.5 percent, from their last settlement. Despite these moves, on a macro level, the global oil market remains well-supplied.

Supply issues in OPEC-member Venezuela are also bolstering oil prices as the South American country suffers a political and economic crisis, with Washington introducing petroleum export sanctions against state-owned energy firm PDVSA.

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"With so far no sign of change in government, we see increasing risks that production losses could be larger and sooner than our forecast for a 0.33 million-bpd supply loss in 2019", USA bank Goldman Sachs said in a note on Wednesday.

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

On the supply side, Saudi Arabia, the defector leader of OPEC, said it was cutting daily production and exports by a further 500,000 barrels per day (bpd) on top of its agreed OPEC quota reduction.

Despite the OPEC cuts and crisis in Venezuela, analysts said global oil markets remain well supplied.

The IEA further added that traders shouldn't expect US sanctions against Venezuela to fuel a rally in oil prices. "China trade talks, ignoring the risks now in place from the loss of Venezuelan barrels", US bank J.P. Morgan said in a weekly note.

US crude oil production remained at a record of 11.9 million barrels per day (bpd).

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