Global oil supply to swamp demand in 2019 despite output cuts - IEA

Crude Oil

OPEC cuts & US sanctions against Iran and Venezuela boosting global crude prices

In a monthly report, the Organization of the Petroleum Exporting Countries lowered its forecast for 2019 economic growth and said demand for its crude would fall to 30.59 million barrels per day, 240,000 bpd less than predicted last month.

International Brent crude futures were up 1 percent, or 65 cents, at $63.07 per barrel.

The global oil market will struggle this year to absorb fast-growing crude supply from outside the Organization of the Petroleum Exporting Countries, even with the group's production cuts and US sanctions on Venezuela and Iran, the International Energy Agency said in a report on Wednesday.

Venezuela's crude production slumped from 3.8 million barrels per day in 1970 to just 1.7 million bpd in 1985, recovering to 3.4 million bpd in 1998 before slumping again to 2.1 million bpd in 2017.

In January, Falih said Saudi Arabia went beyond its commitment to lower both the production and exports of oil over the last couple of months.

Oil prices inched up on Thursday, buoyed by hopes that potential progress in the latest Sino-U.S. tariff talks would improve the global economic outlook.

IEA revised lower its forecast for demand for OPEC crude this year.

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The IEA noted that new U.S. sanctions announced in January on Venezuela's state oil company PDVSA have not so far caused market jitters.

Despite the OPEC cuts and crisis in Venezuela, analysts said global oil markets remain well supplied.

The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly.

Refineries are built to handle a certain quality of crude, and those which process so-called heavy crude from Venezuela, Canada or the Middle East can not be easily converted to treat the light shale oil that is now being produced in greater quantities in the United States.

Crude inventories built for a fourth week in a row, rising 3.6 million barrels to 450.8 million barrels in the week to February 8.

It would be recalled that OPEC and 10 non-OPEC countries agreed in December to cut oil production by 1.2 million bpd effective from January for an initial period of six months to shore up what many expected to be weakening market fundamentals ahead. Analysts were looking for a build of about 2.300 million barrels.

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