Oil Hits 2019 High Amid Supply Cuts

Market torn between high US oil output and OPEC+ compliance with production cuts

EIA expects these trends to continue over the next several years. The report said rising production outside the group pressed the need for continued restraint by Opec+.

OPEC sources have said an extension of the supply-cutting pact is the likely scenario. The group will discuss this at a meeting in April, although top exporter Saudi Arabia has said a decision may not be made until another gathering in June.

Despite this strong compliance, market indicators followed by OPEC still suggest a glut could appear.

The WTI Crude Oil market rallied significantly during the trading session on Wednesday, reaching towards fresh, new highs, at least as far as recent trading is concerned. Crude oil imports to the U.S. fell last week by 523,000 bpd to 6.4 million bpd.

Supply disruptions out of OPEC members Venezuela and Iran helped support oil prices. That amounts to 105 per cent compliance with pledged cuts, according to a Reuters calculation, up from January's rate. Production in Iran and Libya, also exempt, was little changed.

The US Petroleum Institute said Tuesday that crude oil stocks in the United States unexpectedly fell last week, while gasoline stocks fell and distillate stocks increased.

For 2020, the government said it expected U.S. crude oil demand to rise by 220,000 bpd to 21.03 million bpd, unchanged from previous forecasts.

Russian Energy Minister Alexander Novak will not attend a monitoring panel of Opec and non-Opec oil-producing countries scheduled for Monday in Baku, two sources familiar with his plans told Reuters.

In the Middle East, the United States aims to cut Iran's crude exports by about 20 percent to below 1 million barrels per day (bpd) from May by requiring importing countries to reduce purchases to avoid US sanctions, two sources familiar with the matter told Reuters.

Total US petroleum product exports averaged a record 5.6 million bpd in 2018. Propane exports have also increased, mostly to Asian markets. "We do not want severe volatility in prices because this affects producers and consumers", he added.

An unexpected dip in USA crude oil inventories and production also lifted prices, traders said, Reuters reported.

Brent crude hit a 2019 peak of $68.14 per barrel before falling to $67.93 by 1250 GMT, up $0.38 or 0.56% from Wednesday's close.

At the moment the barrel of WTI is up 0.50% at $58.53 and a breakout of $59.63 (50% Fibo of the October-December drop) would open the door for $62.00 (200-day SMA) and then $63.74 (78.6% Fibo of the October-December drop). OPEC's report said oil inventories in developed economies were above the five-year average in January.

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