Economy

Brent price forecast to US$66 per bbl for 2019: Jadwa Investment

Brent price forecast to US$66 per bbl for 2019: Jadwa Investment

Oil prices slipped on Thursday after USA crude inventories rose and the country's production held at record levels, but OPEC-led supply cuts and Washington's sanctions against Venezuela supported markets.

Andrew Lipow, president of Lipow Oil Associates, summarized the situation by remarking, "I think the oil market is trying to decide whether the factory orders will weigh on the price or the Venezuela and oil sanctions will support the price; as a result, we've seen the market fluctuating". Elsewhere, supplies from OPEC face heightened uncertainty after Libya's eastern leader Khalifa Haftar said his forces have taken control of the country's largest oil field.

"All in all this report is bullish for crude oil and refined product prices".

"The fact that US crude oil and gasoline stocks rose more sharply than expected, as reported by the API after the close of trading yesterday, is weighing on prices", said Carsten Fritsch, an analyst at Commerzbank.

"The weekly report from the EIA on USA oil stocks was bullish for outright prices, plain and simple".

International Brent crude oil futures fell 25 cents, or 0.4 per cent, to $62.44 per barrel.

West Texas Intermediate crude for March delivery slipped 0.4 percent to $53.81 a barrel on the New York Mercantile Exchange as of 10:50 a.m. London time. WTI settled 2.73 percent higher in the last session at its highest close since November 19.

OPEC oil supply fell in January by the largest amount in two years despite sluggish production declines from Russian Federation, according to a Reuters survey.

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From a fundamental perspective, the price is benefiting from data suggesting that supplies from the Organization of the Petroleum Exporting Countries fell by the most in two years last month, with Saudi Arabia leading the way.

Lower OPEC output and hopes of some progress over the US-China trade dispute have helped Brent prices recover to around US$60 per bbl, although the outlook on oil demand remains subdued.

The producers known as OPEC+ began cutting production from last month to avert a new supply glut and OPEC has delivered nearly three-quarters of its pledged cutback already, according to a Reuters survey.

US crude oil inventories climbed by 1.3 million barrels in the week that ended February 1, to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.

Market participants are also watching for developments surrounding the U.S.

“With higher production from non-OPEC producers, especially the USA, over the last few years, OPEC's market share has been shrinking, ” said James Williams, energy economist at WTRG Economics.

U.S. President Donald Trump said in his State of the Union address that a trade deal with China was possible.