OPEC revises down slightly oil demand growth forecast 2019

OPEC revises down slightly oil demand growth forecast 2019

OPEC revises down slightly oil demand growth forecast 2019

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. The surprise move was created to bar President Nicolas Maduro's access to oil revenue that has helped his embattled administration remain in power.

While remaining volatile, oil prices have rallied to just above $60 a barrel and jumped more than a dollar after the Opec production update.

"Even so, headline benchmark crude oil prices have hardly changed on news of the sanctions".

"Oil production is rapidly falling and companies that normally resell Venezuelan crude have not found ways to mitigate the effect of the United States sanctions", Barclays bank said. In that letter to OPEC on January 29th, a day before United States inclined sanctions on Venezuelan state-owned oil firm PDVSA, Maduro wrote, "Our country hopes to receive the solidarity and full support of the member countries of OPEC and its ministerial Conference, in the fight we are now having against the illegal and arbitrary intrusion of the United States in the internal affairs of Venezuela".

In its monthly report, Opec said it produced 797,000 fewer barrels per day in January than in the previous month, a decrease in line with the cartel's pledge to curb output in a bid to boost sagging prices.

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.

Saudi Aramco is the world's biggest oil company, producing ten million barrels of oil a day and managing 260 billion barrels in reserves.

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.

In the meantime, the political rift between Venezuela and the United States continues with the USA sanctions against the South American nation giving prices a slight boost. This would help the oil-rich, but cash-poor, country dilute its extra heavy oil for export around the world. U.S. West Texas Intermediate (WTI) crude oil futures rose 89 cents or 1.7 percent to 53.30 U.S. dollars. Venezuela announced that it would sell more oil to India.

Since January 1, an OPEC-led group has been cutting at least 1.2 million barrels per day from production in an effort to trim the global supply and stabilize prices. In quality terms, it is more complicated.

The "call" on OPEC crude is now forecast at 30.7 million bpd in 2019, down from the IEA's last estimate of 31.6 million bpd in January.

Compliance by non-OPEC participants was only 25 percent, however, it said. OPEC members (excluding Iran, Venezuela and Libya) are responsible for two thirds of production cut. Back in December, OPEC and 10 other producers let by Russian Federation agreed to restrict oil production collectively by 1.2 million barrels a day for the first half of 2019.

Any economic slowdown could cap oil markets.

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