Published: Fri, March 15, 2019
Economy | By

Oil hits four-months highs, Brent reaches $68 on tighter supply

Oil hits four-months highs, Brent reaches $68 on tighter supply

Both benchmarks settled at their highest levels since mid-November.

Brent and West Texas Intermediate crude oil futures reached four-months highs on Thursday, as a production curb agreement by OPEC and its partners along with USA sanctions on Iran and Venezuela tightened global supplies.

"According to secondary sources, total OPEC-14 preliminary crude oil productions averages 30.55 million bpd in February, a decrease of 221,000 bpd over the previous month", the Organization of the Petroleum Exporting Countries said in the report.

U.S. supplies dropped more than expected said the EIA.

Oil futures rallied about 2 percent on Wednesday as US crude inventories unexpectedly fell and an official forecast of crude oil supply growth from the world's top producer was revised lower. Opec sources have said an extension of the pact is the likely scenario.

With OPEC voluntarily withholding supply and US sanctions preventing Iranian and Venezuelan oil from entering markets, global crude flow data in Refinitiv showed a slight supply deficit likely appeared in the first quarter.

Despite the new curbs, market indicators followed by Opec will prolong concerns about excess supply. Crude oil imports to the U.S. fell last week by 523,000 bpd to 6.4 million bpd.

EIA: The US imports and exports substantial volumes of petroleum

The US Petroleum Institute said Tuesday that crude oil stocks in the United States unexpectedly fell last week, while gasoline stocks fell and distillate stocks increased.

Meanwhile, US sanctions have helped slash output from OPEC members Venezuela and Iran. It kept its forecast for growth in global oil demand this year unchanged at 1.24 million bpd.

International Brent crude oil futures marked a 2019-peak of $67.80 per barrel in Asian morning hours.

In the Middle East, the United States aims to cut Iran's crude exports by about 20 percent to below 1 million barrels per day (bpd) from May by requiring importing countries to reduce purchases to avoid USA sanctions, two sources familiar with the matter told Reuters.

Brent was still at $67.75 per barrel at 0244 GMT, up 20 cents, or 0.3 percent, from its last close.

International Brent crude oil futures were at $67.37 USA a barrel, up 70 cents, or 1.1%, from their last close. On Sunday, Saudi oil minister Khalid Al-Falih said it would be too early to change OPEC+ output policy at the group's meeting in April. OPEC's report said oil inventories in developed economies were above the five-year average in January.

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