Economy

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

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

At 08:17 a.m. EST on Wednesday, WTI Crude was trading up 0.77 percent at $53.51, while Brent Crude was up 0.72 percent at $62.87.

US restrictions on Venezuela's energy sector should remove some 330,000 bpd in supply this year, according to Goldman Sachs.

The EIA is set to release the weekly inventory report later on Wednesday, while in its Short-Term Energy Outlook (STEO) for February, the EIA said on Tuesday that "After two consecutive months of price declines, crude oil prices increased throughout January and into February as global oil supplies declined relatively quickly".

Saudi Arabia plans to pump around 9.8 million bpd in March, more than 500,000 bpd below its target under the deal, its energy minister told the Financial Times.

The oil price has risen by 20 percent so far this year, yet most of that increase materialised in early January, before the imposition of United States sanctions on Venezuela's energy sector.

Venezuela has the world's largest proven oil reserves, amounting to around 300 billion barrels, ahead of Saudi Arabia on 265 billion and Canada at 170 billion ("Statistical review of world energy", BP, 2018).

Venezuela's crude production slumped from 3.8 million barrels per day in 1970 to just 1.7 million bpd in 1985, recovering to 3.4 million bpd in 1998 before slumping again to 2.1 million bpd in 2017.

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Compliance by non-OPEC participants was only 25 percent, however, it said.

United States crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the Energy Information Administration.

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.

Venezuela has tried to find alternative customers, especially in Asia, but under US pressure many buyers there are also shying away from dealing with PDVSA.

"Some recent positive developments could support the global economy at its current level, including the recovery in oil prices, possible progress in U.S".

Refineries are built to handle a certain quality of crude, and those which process so-called heavy crude from Venezuela, Canada or the Middle East can not be easily converted to treat the light shale oil that is now being produced in greater quantities in the United States.

Global oil cartel Opec said Tuesday it sharply reduced crude oil production last month, after heavyweight Saudia Arabia slashed output and exports fell in crisis-hit Venezuela.


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