WTI Oil: OPEC plans boost oil, but rising US export & economic slowdown pressures
On Friday, oil prices boost as markets squeeze through outputs from OPEC supply cuts. However, the rising United States supply and the global economic slowdown blocks crude oil from rising farther.
The US West Texas Intermediate (WTI) crude oil went up by 19 cents. During 1350 GMT crude oil price is at $57.41 per barrel. That was an incline of about 0.3 percent compared with their previous arrangement. Meanwhile, International Brent crude oil was up by 28 cents. It was up by 0.4 percent amounting to $66.59 per barrel.
Traders say the oil market is squeezing.
Since January 28 this year, the US government sanctions Venezuela’s petroleum industry. As a result, the country’s oil exports are down by 40 percent. That was about 920,00 barrels per day.
The decline comes due to the Organization of the Petroleum Exporting Countries (OPEC). Venezuela is a founding member of OPEC. To explain further, its efforts since the beginning of 2019 withholds around 1.2 million barrels per day of supply. That needs to prop up prices.
In a research note for oil markets, Canada’s RBC Capital Market says, “Global (oil) markets appear tighter than many anticipated for this time of year, but scores of unsold barrels can pile up quickly and saturate regions.”
However, there are signs pointing to a greater amply supply market which is said to be heading further in 2019.
The U.S. Energy Department
On Thursday, United State Energy Department offers about 6 million barrels of crude oil from the national emergency reserves. That is to raise funds to improve the United States strategic oil reserves.
Moreover, the U.S. output recently hits a record of over 12 million barrels per day. That pushes the exports to an unprecedented 3.6 million barrels per day for February.
RBC Investment Bank Estimates
Meanwhile, Investment bank RBC says that crude oil from the United States Gulf of Mexico port of Houston has a long way to go. RBC says it “can economically move anywhere globally when priced at a discount of $1.70 per barrel relative to the waterborne Brent benchmark”.
Houston crude was last trade is amounting to $6.60 per barrel over WTI. It still at a discount of more than $2.15 per barrel on Brent. Looking at the demand side, the Reuters poll reveals that the majority of the analysts expects that global fuel demand to slow down in 2019.
Asian Economy
Meanwhile, On Friday, a private survey has shown a significant decline in one of China’s main sector. The country’s factory industry fell for the third month as the country continues to struggle with the weak export orders.
Economic slowdown and weakness are present across the region. In South Korea, exports contracts in nearly three years are at their steepest pace. The demand from its major market cools further. That was another sign of faltering momentum within Asia’s fourth-largest economy.
But fuel usage, especially within Asia’s developing economies, are holding up so far. For instance, India’s diesel usage is expected to incline to a record this year towards a strong expansion of their heavy-duty vehicles.
