Oil Prices Spike As EIA Confirms Inventory Draw

Mae Love
March 14, 2019

Hours before the Election Commission announced the dates of the Lok Sabha polls, India and Saudi Arabia came to an understanding to revive and "expedite" the implementation of $44 billion West Coast refinery project in Maharashtra, in which Saudi Aramco will be holding a considerable stake.

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

Brent crude futures were at $65.04 per barrel, up 30 cents, or 0.5 per cent.

Both benchmarks settled at their highest levels since mid-November.

Gross exports from Russian Federation and Saudi Arabia are expected to hold steady at current levels of more than 8 million barrels per day and more than 9 million barrels per day, respectively, while the US increases exports from 4.5 million in 2018 to almost 6 million this year and more than 8 million barrels per day in 2021.

US crude stocks also fell unexpectedly last week, data from the American Petroleum Institute showed on Tuesday, in a good sign for oil demand as supply from various producers was being curbed. In particular, Saudi Arabia's oil production in February fell to 10.136 million bpd, a Saudi industry source told Reuters on Friday, down from 10.24 million bpd in January. The EIA posts its weekly statistics at 1430 GMT.

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"The oil market maintained its buoyancy, thanks to Monday's Saudi commitment to deep supply cuts and power outages in Venezuela crippling the loading of oil at key terminals", Tchilinguirian added.

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.

Saudi Arabia's total gross exports are predicted to stand at 9.52 million barrels a day in 2024, while USA is rapidly closing the gap with the kingdom.

Saudi Energy Minister Khalid al-Falih said on Sunday the production-curbing agreement would likely last until at least June.

"The ministers reviewed various Saudi investment proposals in the Indian oil and gas sector, including the urgent steps to be taken to expedite the implementation of the first joint venture West Coast Refinery and Petrochemical Project in Maharashtra, estimated to cost the USA $44 billion, which will be the largest greenfield refinery in the world", a government statement said on Sunday.

Traders also pointed to the political and economic crisis in OPEC-member Venezuela as a driver for oil prices. This report is expected to show that inventories rose by 2.9 million barrels.

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