February 17, 2019

USA oil prices edge up as market eyes tighter supply

07 February 2019, 02:53 | Joann Bryant

Venezuelan opposition readies U.S. fund to receive oil revenue

US oil prices edge up as market eyes tighter supply

Another factor behind the oil market rally is the supply cuts imposed by the member-states of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers.

US oil prices inched up on Tuesday, buoyed by expectations of tightening global supply due to USA sanctions on Venezuela and production cuts led by OPEC.

"Distillate demand increased sharply last week due to the extreme cold weather, which contributed to the declining distillate stocks", said Commerzbank analyst Carsten Fritsch.

Meanwhile, the national price for regular gas on Wednesday averaged about 2.28 US dollars per gallon (about 3.8 liters), compared with 2.26 dollars per gallon a week ago, 2.24 dollars per gallon a month ago and 2.60 dollars per gallon a year ago, according to data of the American Automobile Association (AAA), which is a privately held non-profit national member association and service organization in the United States and Canada.

United States government data on Wednesday showed that domestic crude inventories rose by less than expected last week even as refineries hiked output.

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

U.S. West Texas Intermediate (WTI) crude was down 13 cents at $53.53.

Crude futures earlier posted around two-month highs.

The producers known as OPEC+ began cutting production by 1.2 million barrels per day 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. The cartel and the world's biggest exporter, Saudi Arabia, slashed its output more than expected under the OPEC deal, to 10.2 million barrels a day in January and is aiming to pump around 100,000 barrels less in February.

US imports of Venezuelan crude fell 41 percent to 345,000 barrels a day last week, the least since August, according to preliminary EIA data.

"The price has yet to react in any noticeable way", he said.

Global economic worries have weighed on market sentiment in recent days, offsetting support from signs that global supplies are tightening.

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

USA energy firms last week cut the number of oil rigs operating to their lowest in eight months as some drillers followed through on plans to spend less on new wells this year.

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

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