Oil price surges amid OPEC cuts & United States sanctions against Venezuela

Oil price surges amid OPEC cuts & United States sanctions against Venezuela

Oil price surges amid OPEC cuts & United States sanctions against Venezuela

That's down from 10.643 million bpd in December, representing a cut that was 70,000 bpd deeper than targeted under the OPEC-led pact to balance the market and support prices.

A decline in OPEC production and a squeeze on supply from Iran and Venezuela from USA sanctions have led many analysts to forecast that the market will be balanced in 2019. Still, "more hard work is needed to turn this market unreservedly bullish". All in all, many analysts expect the heightened oil price volatility we have been witnessing for a few months now to remain throughout 2019.

Helping to underpin prices are the OPEC-led supply cuts and Washington's sanctions against Venezuelan crude exports.

"The price has yet to react in any noticeable way", he said.

Though the United States published robust jobs data last week, global markets remain nervous after China reported the lowest annual economic growth in almost 30 years in January.

U.S. West Texas Intermediate (WTI) crude was down 55 cents at $53.11. The contract increased 35 cents to $54.01 on Wednesday.

International Brent crude oil futures had yet to trade.

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The daily trend is up for both WTI and Brent crude oil, however, momentum is starting to shift to the downside.

USA crude inventories rose by 2.5 million barrels last week, according to industry group the American Petroleum Institute, and gasoline stocks also increased. Output from OPEC's 14 current members fell by 930,000 barrels a day to 31.02 million, according to a Bloomberg survey.

About a dozen tankers carrying over 7 million barrels of Venezuelan crude and products were anchored this week at the U.S Gulf Coast waiting for directions on how to pay for the cargoes following the sanctions, according to Refinitiv Eikon data. They closed down 1.7 percent on Tuesday.

U.S. President Donald Trump said in his State of the Union address that a trade deal was possible with China. Energy information provider Argus Media, said producer cuts will eventually help level oil prices again as 2019 wears on.

USA imports of Venezuelan crude fell 41 percent to 345,000 barrels a day last week, the least since August, according to preliminary EIA data.

Market participants are also watching for developments surrounding the U.S. The sanctions aim to block U.S. refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro. "Around a third of Venezuela's exports head to the USA, as such, we expect Venezuelan exports to quickly fall by 300,000 barrels per day (bpd) to around 700,000 bpd", ANZ bank said on Thursday.

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