Rumour Causes Oil Prices to Drop as Analyst Complains of "Forecasting Nightmare"

Irving Hamilton
April 15, 2019

American benchmark West Texas Intermediate (WTI) was trading at $63.86 per barrel at the same time with a 0.1% gain after ending the previous day at $63.78 a barrel.

Output declines in OPEC because of the supply pact, plus the sanctions on Venezuela and Iran, have exceeded expectations.

Global oil supply dropped by 340,000 barrels per day (b/d) in March to 99.2 million b/d, as the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC cuts deepened and Venezuelan output fell sharply, according to data from the International Energy Agency (IEA) on Thursday. Two days ago, OPEC reported Venezuela's March output sank to 732,000 bpd, citing independent sources, while figures provided by the country put production at 960,000 bpd.

The report also said that Angola was one of China's three largest oil suppliers, together with Saudi Arabia and Russian Federation, with shares of 11.3%, 15.2% and 14.6% in February, respectively.

"Demand in China, India and the U.S.is estimated to have grown by 1 million b/d in Jan-Feb 2019". Macroeconomic uncertainties can take their toll on oil demand, the IEA said. The group pegged 2018 global oil demand growth at 1.41 million bpd.

It said that US, Brazil, Russia, UK, Australia, Ghana, Sudan and South Sudan will be the main drivers of supply growth this year.

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OPEC also revised down non-OPEC oil supply growth in 2019 by 60,000 bpd "due to extended maintenance in Kazakhstan, Brazil and Canada". WTI whit a high of $64.79 going back to November 1 earlier this week.

Production in Venezuela has been plunging as the United States sanctions add to a deep economic and political crisis, while the U.S. government is expected to tighten oil sanctions against Iran in May.

OPEC, Russia and other non-member producers are reducing output by 1.2 million bpd from January 1 for six months.

In February, the oil reserves of the OECD countries remained at 16 million barrels above the five-year average.

OPEC production, meanwhile, fell 0.55 million bpd in March to 30.13 million bpd - a four-year low - largely due to cuts in Saudi Arabia and crisis-hit Venezuela, the IEA said.

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