Oil prices, TSX rise after OPEC extends production cuts to June

Mae Love
March 19, 2019

The global benchmark reached a 2019 high of $68.14 last week.

The Saudi minister spoke ahead of a meeting in Baku of a committee of OPEC+ members responsible for monitoring output. The Organization of Petroleum Exporting Countries and its allies have entered its third year of curbing supply in order to defend crude prices.

Saudi Arabia's crude oil exports plunged by almost 550,000 bpd to 7.687 million bpd in December, down from a two-year high in November, as the Kingdom started to limit supply after the US granted waivers to eight Iranian customers and the market swung into oversupply.

Russian Energy Minister Alexander Novak said it was hard for Moscow and OPEC to plan due to the USA sanctions. Brent crude futures contracts that are expiring in April are now at $66.03/barrel.

USA sanctions against oil producers Iran and Venezuela are also boosting crude prices, although traders say the market looks capped by rising American output. "We're seeing inventories building, and even if they stop building we still have a long way to go" to bring the market back into balance. "A synchronized global slowdown in growth could push global demand growth to below 1 million bpd", Bernstein Energy said in its report.

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"We like to remain ready to continue monitoring supply and demand and do what we have to do in the second half", said Falih as some OPEC ministers met in the Azeri capital of Baku for the monitoring committee of OPEC and its allies like Russian Federation.

Producers are conforming well with output cuts they agreed to make starting in January, and their compliance is improving and will easily exceed 100 per cent in March, Al-Falih said.

According to data by the Joint Organisations Data Initiative (JODI) database, which collects self-reported figures from 114 countries, Saudi crude oil exports dropped to 7.254 million bpd in January, down from 7.687 million bpd in December 2018. The lower allocations by Saudi Aramco for April will also mean that the Kingdom's oil production will be "well below 10 million bpd" in April, a Saudi official told Reuters.

After testing fresh 2019 highs in the boundaries of $59.60, prices of the barrel of the West Texas Intermediate met some selling pressure and are now hovering over the $59.20 region.

"We should continue till June and then decide, but we are continuously observing and analyzing the market", Ghadhban said.

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