Rising US oil clout on show in Houston

Andrew Cummings
March 18, 2019

International Brent crude oil futures marked a 2019-peak of $67.80 per barrel in Asian morning hours.

The power crisis in the South American country that disrupted crude exports this week could return or worsen, threatening 1.2 million barrels per day (bpd) of oil supplies, or more than one-percent of global output.

Oil prices rose yesterday, driven by OPEC's current production restrictions and United States sanctions against Iran and Venezuela.

Oil prices were steady on Friday, supported as production cuts led by OPEC and USA sanctions against Venezuela and Iran likely created a slight deficit in global supply in the first quarter of 2019.

U.S. West Texas Intermediate crude futures ended Thursday's trading session at $58.56/Bbl, up 30 cents, or 0.51%, Kallanish Energy reports.

"With OPEC's cuts in full-swing ... persistent supply issues and a deteriorating picture on Venezuela, oil is looking well supported", said Jasper Lawler, head of research at futures brokerage London Capital Group.

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.

The Paris-based IEA said the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million bpd.

Venezuela produces about 1.2 million barrels of oil a day when operating normally, said the IEA.

The US Energy Information Administration said late Tuesday that crude oil production in the United States is expected to grow more slowly than expected in 2019, averaging around 12.30 million bpd.

"Geopolitics has added another complication to the global oil market", said the IEA.

The agency's monthly report indicates that the lower production out of the troubled country could be a "challenge" for the world's oil markets. In the week ending March 8 to 449 million barrels, raw stocks fell by 2.6 million barrels, compared to analysts' forecasts for an increase of 2.7 million barrels. Data from the Petroleum Institute showed that crude oil consumption increased by 29,000 bpd.

Oil rallied on Wednesday on US government data showing a surprise fall in crude inventory and a lower-than-expected estimate of USA crude production growth.

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