Economy

Crude Inventories Pale, Oil Prices Extend Gains

Crude Inventories Pale, Oil Prices Extend Gains”

The OPEC Reference Basket (ORB), a weighted average of prices for petroleum blends produced by the cartel's members, rose in February for the second consecutive month, increasing by about 9 percent, or 5.09 USA dollars, month-on-month to average 63.83 US dollars per barrel, said the report.

Several factors contributed to the idea of a tightening market, including the Energy Information Administration reporting on Wednesday that US crude inventories fell by 3.9 million barrels last week.

USA supplies dropped more than expected said the EIA.

In its monthly report released on Thursday, the group cut the forecast of demand for its crude this year and predicted strong growth in non-OPEC supply.

The National Bank of Australia said the outlook for the oil market was mixed because there were downside risks to prices due to concerns about economic growth and strong growth in U.S. supply, while the cutbacks in OPEC declined and the United States imposed sanctions on Iran and Venezuela. That amounts to 105 per cent compliance with pledged cuts, according to a Reuters calculation, up from January's rate.

Even so, with the demand for Opec crude forecast at 30.46 million bpd, the report indicates that the market would still face a small 2019 surplus if OPEC kept pumping at February›s rate, as rivals such as the United States boost output.

Brent crude hit a 2019 peak of $68.14 per barrel before falling to $67.93 by 1250 GMT, up $0.38 or 0.56% from Wednesday's close.

Meanwhile, US sanctions have helped slash output from OPEC members Venezuela and Iran. Brent touched $67.76 a barrel on Wednesday, its highest since November 16.

Other EIA data showed US crude output edged down from a record high, dropping 100,000 barrels per day (bpd) to 12 million bpd last week.

Global benchmark Brent crude rose 0.15 percent to $67.58 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were trading flat at $58.28 per barrel.

Saudi Energy Minister Khalid al-Falih said on Sunday that the production-curbing agreement would likely last until at least June.

"With the refiners starting to slowly come out of maintenance, OPEC cuts starting to kick in, and Venezuelan supplies, you're probably now looking at a future with more draws in the coming weeks", said Phil Flynn, analyst at Price Futures Group in Chicago.



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