Oil eases from four-month high on global growth worries

Andrew Cummings
March 22, 2019

While Iranian customers have started negotiations with the US on possible waiver extensions to continue buying oil from Tehran, Iran's oil exports so far in March are down from January and February to average around 1 million bpd-1.1 million bpd, Reuters reported on Thursday, citing industry sources and ship-tracking data.

Despite a more than a quarter increase in crude prices this year, Canadian investment bank RBC Capital Markets said oil was "still below the fiscal breakeven level in a number of OPEC countries", meaning that many producers have an interest in further propping up the market.

Total products supplied over the last four-week period averaged 21.1 million barrels per day, up by 2.8 percent from the same period a year ago.

The front-month U.S. West Texas Intermediate (WTI) crude futures contract, which expired Wednesday, gained 80 cents, or 1.36 percent, to settle at $59.83 a barrel. For the week ended March 15, USA crude oil refinery inputs averaged 16.2 million barrels per day, which was 178,000 barrels per day higher than the previous week, the EIA said in a report on Wednesday. Vienna-based consultancy JBC Energy estimated stocks had run down by a "solid" 40 million barrels since mid-January.

"Venezuelan exports to the U.S. have finally dried up, after the sanctions were placed on them by the United States administration earlier this year", ANZ bank said.

Gasoline and distillate inventories both fell by more than expected.

Shipments have dropped from at least 2.5 million bpd in April 2018, the month before U.S. President Donald Trump withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions, fueling a year of economic crisis in the country.

However, analysts had been quoted saying that the gains were largely curbed by increasing concerns over global economic growth and an ongoing US-China trade war. The draw brought stockpiles to their lowest since January. Brent's key support is $67.74.

US sanctions are disrupting supply.

The oil cartel and its allies, which are often referred to as OPEC +, agreed to institute substantial production cuts to tame a supply glut mostly formed by surging USA production of shale oil.

And this effort has helped to rebalance global oil market, which has also buoyed prices.

"The positive sentiment from OPEC's cuts is outweighing the bearish impact of the US shale boom", said Matt Smith, director of commodity research at ClipperData, a research firm tracking the global oil industry.

Other reports by iNewsToday