Economy

OPEC cuts 2019 oil demand forecast on global slowdown

OPEC cuts 2019 oil demand forecast on global slowdown

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.

In effect, sanctions have shifted the balance of global oil production in the direction of lighter crudes, at the same time that the economy and forthcoming regulations are pushing refinery demand towards heavier grades.

At 07:56 GMT, April WTI crude oil is trading $53.82, up $0.35 or +0.65% and April Brent crude oil is at $62.94, up $0.52 or +0.83%.

Further news from the IEA's report said the agency now sees demand for OPEC crude at 30.7 mbpd this year vs. 31.6 mbpd previous.

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.

In the report, OPEC said its oil output fell by 797,000 bpd month on month to 30.806 million bpd in January. In another bullish sign this week, President Donald Trump struck a conciliatory tone on trade talks with China, suggesting higher tariffs might be averted.

"In quantity terms, in 2019, the USA alone will grow its crude oil production by more than Venezuela's current output".

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Additionally, the International Energy Agency said energy market participants may be able to adjust to US sanctions against Venezuela's crude industry.

"The imposition of sanctions by the United States against Venezuela's state oil company Petroleos de Venezuela (PDVSA) is another reminder of the huge importance for oil of political events", the IEA said.

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.

"This is because, in terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations", the group added.

The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly.

The American Petroleum Institute (API) reported a smaller-than-expected draw of 998,000 barrels during the week-ending February 8. Analysts were looking for a build of about 2.300 million barrels.

Gasoline inventories for the same period rose 746,000 barrels.


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