Opec stresses need for 2019 oil supply cuts

Mae Love
March 15, 2019

In a monthly report, the Organization of the Petroleum Exporting Countries said 2019 demand for its crude would average 30.46 million barrels per day, 130,000 bpd less than forecast last month and below what it is now producing.

Product inventories also declined, with those gasoline down by 4.6m barrels, together with a 1.2m barrel drop in those of propane/propylene.

US crude oil futures settled at $58.26 a barrel, rising $1.39 cents, or 2.44 percent.

With OPEC voluntarily withholding supply and USA sanctions preventing Iranian and Venezuelan oil from entering markets, global crude flow data in Refinitiv showed a slight supply deficit likely appeared in the first quarter. U.S. West Texas Intermediate crude futures were at $57.99 per barrel, up $1.12, or 2%- building on their strong gains from earlier in the day.

OPEC's bearish demand outlook was offset by its apparent resolve to extend crude output cuts, agreed to by its members and allied producers, which have helped oil prices rise more than 20 percent this year.

"I expect to see WTI hitting $60 a barrel in the next couple of weeks as inventories in the USA are impacted by the lack of Venezuelan imports", said Andrew Lipow, president of Lipow Oil Associates in Houston.

EIA expected these trends "to continue over the next several years".

Forecasts slowed USA production to a record of 13 million barrels per day (bps) until the third quarter of 2020, instead of the second quarter of previous forecasts.

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The trade volume of petroleum in the United States includes crude oil, petroleum products, and natural gas plant liquids, according to EIA.

Crude oil imports have decreased in recent years as U.S. crude oil production has increased.

United States crude oil inventories shrank unexpectedly again last week, alongside another drawdown in product inventories.

For 2020, the government said it expected United States crude oil demand to rise by 220,000 bpd to 21.03 million bpd, unchanged from previous forecasts.

In China, official statistics showed refinery crude oil use hit a record. Petrol stocks fell by 5.8 million barrels, compared to analysts' forecasts in a 2.5 million barrel survey at Reuters.

In the Middle East, the United States aims to cut Iran's crude exports by about 20 percent to below 1 million barrels per day (bpd) from May by requiring importing countries to reduce purchases to avoid US sanctions, two sources familiar with the matter told Reuters.

Overall Opec output fell by 221,000 bpd month-on-month to 30.55 million bpd.

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