Oil hits four-months highs, Brent reaches $68 on tighter supply

Irving Hamilton
March 15, 2019

Opec on Thursday cut the forecast of global demand for its oil this year as rivals boost production.

Oil futures steadied on Tuesday on signs that OPEC plans to maintain production cuts despite pressure from U.S. President, whose comment criticizing rising crude prices sent the market into a tailspin a day earlier.

The production cut agreement by Saudi Arabia-led OPEC and Russia-led OPEC is also contributing to the removal of additional supplies in the market to push prices higher.

"While oil demand is expected to grow at a moderate pace in 2019, it is still well below the strong growth expected in the non-OPEC supply forecast for this year", OPEC said in the report.

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

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.

Another influence for traders was USA sanctions against oil exports from Iran and Venezuela said to be contributing to the tightening: Barclays noted that "Failures in [Venezuela's] electrical system".

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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.

On Sunday, Saudi oil minister Khalid Al-Falih said it would be too early to change OPEC+ output policy at the group's meeting in April.

Saudi Arabia said that it is planning to cut its crude oil exports in April to below 7 million barrels per day and keep its output well below 10 million barrels per day.

Iraq exported on average around 3.6 million bpd in January-February, and 3.7 million in December.

The price of oil has been steadily increasing over the past couple of months.

Product inventories also declined, with those gasoline down by 4.6m barrels, together with a 1.2m barrel drop in those of propane/propylene. Brent touched $67.76 a barrel on Wednesday, its highest since November 16.

By 15:07 GMT, the crude Brent for the world benchmark was $ 67.22 a barrel, an increase of 55 cents or 0.82 percent over the previous closing.

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