1% increase in oil prices following intensification of cuts in OPEC supplies and sanctions in Venezuela

SINGAPORE (Reuters) – Oil prices rose Wednesday, the OPEC producer club announced that it had sharply reduced its stocks in January and that US sanctions were hitting Venezuelan oil exports.

The US West Texas Intermediate (WTI) crude futures price was $ 53.70 per barrel at 0344 GMT, up 60 cents (1.1%) from their last close.

Futures contracts on international Brent rose 1.1%, or 69 cents, to $ 63.11 per barrel.

Jeffrey Halley, senior market badyst at OANDA, futures broker in Singapore, said oil prices had risen after "Saudi Arabia had announced that it would reduce daily production and exports. an additional 500,000 barrels per day, in addition to the quota cut agreed by OPEC ".

The Organization of the Petroleum Exporting Countries (OPEC), effectively led by Saudi Arabia as the world's largest exporter of crude oil, announced Tuesday that it has reduced production by nearly 800,000 barrels / day in January to 30, 81 million barrels a day.

OPEC member Venezuela's supply problems are also driving up oil prices as the South American country goes through a political and economic crisis, with Washington introducing sanctions on oil exports for the United States. public company PDVSA.

Despite political dissent between Venezuela and the United States, US refiners have been among the largest buyers of Venezuelan crude.

These customers collapsed after Washington imposed sanctions earlier this year.

"With no sign of a change of government to date, we see growing risks that production losses will be larger and earlier than expected – a supply loss of 0.33 million bpd in 2019 ", said Wednesday the US bank Goldman Sachs.

Venezuela has been trying to find alternative customers, particularly in Asia, but under pressure from the United States, many buyers are also reluctant to deal with PDVSA.

"Oil production is declining fast and companies that normally resell Venezuelan crude have not found a way to mitigate the consequences of US sanctions," said Barclays Bank.

REQUEST LOW

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

"Oil markets continue to focus at the macro level on the dual concepts of adequate supply and demand mitigation," said Frank Verrastro, senior vice president of the National Energy and Security Program at the Center for Strategic and Environmental Studies. (CSIS) -tank, says in a note.

He added that markets were largely supplied because of "sufficient global oil stocks, the prospect of weakened demand related to both US-China trade and broader economic concerns, of the maintenance strategy. seasonal refineries – when demand for crude oil decreases – and the influx of new ships, supplies from the United States and elsewhere.

Most of the new supplies come from the United States, where crude oil production increased by more than 2 million bpd last year to a record 11.9 million bpd, making the country the largest producer. world oil, ahead of Russia and Saudi Arabia.

And while OPEC and its allies, including Russia, hold back supply, US production is expected to increase further, with the Energy Information Administration saying Tuesday that US crude oil production is expected to reach 13.2 million b / by 2020.

For a graph of Russian, American and Saudi crude oil production, see – tmsnrt.rs/2CTwqaq