
Traders are bracing for increasing supplies at Cushing, Oklahoma, the delivery point for benchmark US crude futures, as refinery outages could create a supply backlog that will add to inventories that are already at the highest in more than a year.
"In quantity terms, in 2019, the US alone will grow its crude oil production by more than Venezuela's current output".
U.S. WTI futures hit a high of $53.70 per barrel before receding slightly to $53.54 per barrel, a 0.83 percent rise, as of 2:04 p.m. HK/SIN.
"The imposition of sanctions by the United States against Venezuela's state oil company Petroleos de Venezuela (PDVSA) is another reminder of the huge importance for oil of political events", the Paris-based IEA said Tuesday.
Currently Brent benchmark price stands at $62.7/barrel, about 16% above the early January level.
The cartel's scale-back was in line with an agreement by Opec and non-Opec members in December to trim production by 1.2 million barrels a day from January 1.
Goldman said it remains "cautious" on the price outlook for the second half of 2019 as it expects a decline in the marginal cost of production.
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The report comes at a time when tensions in Venezuela are reaching boiling point, with the oil-rich, but cash-poor, country in the midst of the Western Hemisphere's worst humanitarian crisis in recent memory.
Total OPEC production stood at just over 30.8 million bpd in January, down from 31.6 million bpd in December, according to independent sources cited by the group in its monthly report.
None of these options are appealing, and all of them are likely to result in higher costs for refined products, particularly the middle distillates such as diesel and jet fuel that are produced in greater quantities from heavy crudes. OPEC and other countries will either have to continue curbing extraction to maintain prices in the future or accept an energy independent US and the likely oversupply of energy that would bring to the market.
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.
In the OECD, 2019 US growth was revised lower to 2.5 percent, following growth of 2.9 percent in 2018, while eurozone growth was also revised down to 1.3 percent for 2019, after growth of 1.8 percent in 2018, it said. In quality terms, it is more complicated.
It said OPEC crude output was 930 thousand b/d lower in January at 30.83 million b/d, hitting a almost four-year low. The supply cuts, which also include Russian Federation and nine other non-OPEC producers, took effect on January 1.
The combination of the OPEC-led production cuts, the increased reduction by the Saudis and in a limited way, the sanctions against Venezuela are helping to underpin prices, but in order to put the market over the top, demand is going to have to increase.
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