Oil prices rally amid falling United States gasoline supplies, rising crude stockpiles

Jeannie Matthews
April 12, 2019

According to EIA's data, US crude oil production averaged 12.2 million barrels per day (b/d) last week, the same as the previous week and up by about 1.7 million b/d year-on-year.

In its latest monthly oil market report, the Paris-based IEA said production by OPEC kingpin Saudi Arabia dropped to its lowest level in two years in March after the cartel agreed to cuts with Russian Federation and other ex-Soviet states.

In the week ending April 5, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.0 million barrels from the previous week, the U.S. Energy Information Administration (EIA) said on Wednesday.

US West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.53, up 13 cents, or 0.2%.

THE price of Bonny Light, Nigeria's premium oil grade has risen from $70 to $71.74 per barrel in the worldwide market, the highest in 2019, as the Organisation of Petroleum Exporting Countries, OPEC, continue to eliminate excess supply from the volatile market.

"We expect the drivers of this deficit to persist through 2Q19" due to a "shock and awe implementation of the OPEC cuts, further tightening of U.S. oil sanctions and an only moderate increase in shale production for now", the USA bank said in a note.

As a result, Brent and WTI crude oil futures have risen by around 30 percent and 40 percent respectively since the start of the year.

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In recent months the forecasts for global economic growth have been trimmed back on concerns about the impact of trade disputes, which come as export powerhouse China has been experiencing slower rates of expansion.

The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices, but also involuntary curbs from Venezuela and Iran - which are exempt from the OPEC cut pact - due to USA sanctions.

The UAE now produces around 3 million bpd under the OPEC+ reduction agreement.

It sees United States crude oil averaging $59.50 per barrel, up from its last forecast of $55.50.

Despite the OPEC-led cuts and USA sanctions, not all regions are in tight supply.

The United States and China have yet to find a solution to their dispute on trade, while the International Monetary Fund on Tuesday cut its global economic growth forecasts.

Oil prices fell on Thursday after USA crude stockpiles surged to their highest levels in nearly 17 months amid record production.

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