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

The Opec+ cuts are taking effect and US data is starting to reflect these changing market conditions. — Reuters  file

The Opec+ cuts are taking effect and US data is starting to reflect these changing market conditions. — Reuters file

The agency also lowered its forecast for demand for OPEC crude, production of which the group has pledged to cut by 800,000 bpd this year as part of an agreement with Russian Federation and other non-OPEC producers such as Oman and Kazakhstan.

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

Nigeria's crude oil production including condensate has taken a dip, falling to 1.999 million barrels per day in January from 2.081 million bpd in December, figures from the Ministry of Petroleum Resources has revealed.

US crude oil inventories rose last week to the highest since November 2017 as refiners cut runs to the lowest since October 2017, the Energy Information Administration said on Wednesday.

At the moment the barrel of WTI is up 1.36% at $53.98 facing the next hurdle at $ $55.59 (2019 high Feb.4) ahead of $57.55 (100-day SMA) and then $58.00 (high Nov.16 2018).

The cartel made the pledge a year ago alongside major oil producing countries outside the cartel, including Russian Federation, to safeguard oil prices against a global economic slowdown.

On Tuesday, the Saudis said it had cut its output by nearly 800,000 bpd in January to 30.81 million bpd.

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Most of those crudes have an even higher sulfur content than Venezuela's, which will require extra processing to make fuels of acceptable quality, and in any event the quantities are limited in the short term.

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. Energy Minister Khalid al-Falih on Tuesday told the Financial Times production would fall below 10 million bpd in March, more than half a million bpd below the target it agreed to as part of a global deal to limit supply.

In the meantime, the political rift between Venezuela and the United States continues with the US sanctions against the South American nation giving prices a slight boost.

Oil descended into a bear market in November, a swift drop from four-year highs seen in October, as traders grew anxious over strengthening U.S. production and an outlook for softer global fuel demand.

The IEA further added that traders shouldn't expect USA sanctions against Venezuela to fuel a rally in oil prices.

In the United States, crude inventories fell by 998,000 barrels in the latest week, trouncing forecasts for a rise of 2.7 million barrels, according to data from industry group the American Petroleum Institute on Tuesday.

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