Crude Oil Futures Settle Higher Despite Rise In Inventory

Crude Oil

Oil climbs to 5-month high amid OPEC cuts, US sanctions, Libya fighting

Al Mazrouei was obviously hinting at the decision by OPEC and Russian Federation to reverse the production cuts in the summer of 2018, in order to ensure a well-supplied market amid expectations that the US would drive Iranian oil exports to zero.

The investment bank said in a recent note that it now expects benchmark Brent crude prices to average $66 per barrel in 2019, compared with its previous estimate of $62.50.

Worldwide benchmark Brent futures were at $70.62 per barrel at 0716 GMT on Monday, up 28 cents, or 0.4 per cent from their last close.

Oil prices crept higher on Wednesday, supported by supply cuts by producer club OPEC and USA sanctions against oil exporters Iran and Venezuela, but restricted by expectations that an economic slowdown could soon dent fuel consumption. U.S. West Texas Intermediate crude oil futures rose 64 cents, or 1%, to $64.62 per barrel, holding just below their strongest level since November.

Saudi energy minister said Monday it was premature to say whether a consensus existed among OPEC and its allies to extend oil supply cuts but a meeting next month would be key.

An OPEC monthly report released on Wednesday showed that Venezuela's oil output sank last month to a long-term low below 1 million barrels per day, due to US sanctions and blackouts.

The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices.

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But then the US granted waivers to Iran's biggest oil customers, including China and India, and OPEC and its Russia-led allies forged in December a new production cut deal aimed at reversing the new glut that had started to build in Q4 2018 after OPEC anticipated incorrectly.

The OPEC monthly report released on Wednesday showed that Venezuela's oil output sank last month to a long-term low below 1 million barrels per day, due to USA sanctions and blackouts.

Oil production in the United States has risen by more than 2 million bpd since early 2018, to a record 12.2 million bpd.

"WTI has not seen the same strength (as Brent). given the relatively more bearish fundamentals in the US market", said ING bank.

"Brent crude passed the US$70 a barrel mark for the first time in months a few days ago and now, thanks to the new from Libya, it has continued rising".

According to the Department of Energy, America's stores of commercial crude oil rose by 7.0m barrels over the week ending on 5 April to reach 456.5m barrels (consensus: 2.3m b/d), leaving them at their average level of the past five years. The forecast cut 0.2 percentage point from the IMF's outlook in January.

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