OPEC may raise oil output if prices increase, shortages mount

Andrew Cummings
April 14, 2019

U.S. West Texas Intermediate (WTI) crude oil futures were at 64.28 U.S. dollars per barrel, down 33 cents, or 0.5 percent, from their previous settlement.

Prices also continue to be supported by the on-going OPEC-led supply cuts and the US sanctions against Iran and Venezuela, which have helped tighten global supplies.

Apart from growing speculation over OPEC's next move on crude supply, Thursday's (April 11th) data had revealed an upsurge in the USA crude stockpiles, which had also contributed potentially to the decline of USA crude future price.

Crude futures rose again on Friday, heading for a sixth-straight week of gains, as threats of a wipeout in Libyan crude supply bolstered an already squeezed market.

Oil prices have recovered sharply since December, when they fell to a 15-month low, and ICE Brent has been trading a five-month high of above $71 per barrel this week.

Its 14 members pumped 30.02 million bpd in March, its lowest output figure since February 2015.

Current oil demand stands around 100 million bpd.

The International Energy Agency said on Thursday that Venezuelan crude production has dropped below 1 million bpd to 870,000 bpd due to USA sanctions, and Iranian supply could fall further after May if Washington tightens its sanctions against Tehran, as many experts anticipate.

According to the report, only time will tell if the EIA current demand forecast (1.4 mb/d) proves accurate, but the "risks are now to the downside". The IEA also said that US sanctions and power outages pushed OPEC...

Additionally, supply from Libya is also in decline as tensions continue between UN-backed Government of National Accord and east Libya-based commander Khalifa Haftar who now controls around half of the oil fields in the country that have a total of 1.1 million bpd of oil production.

The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from January 1 for six months.

Meanwhile, the latest EIA report showed that the U.S. crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017. Additionally, U.S. crude output remained at a record 12.2 million barrels per day.

In 2018 OPEC+ made a decision to increase output at its mid-year meeting, only to return to production cuts in 2019.

At the same time, the International Energy Agency (IEA) reported that OPEC production fell 550,000 bpd.

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