Oil Retreats as Swelling U.S. Stockpiles Undermine OPEC's Cuts

Oil Price Fundamental Weekly Forecast – OPEC March Output Falls Escalation of Libyan Conflict Could Spike Prices Higher

Oil climbs to 5-month high amid OPEC cuts, US sanctions, Libya fighting

United Arab Emirates' energy minister said on Wednesday that Russian Federation was committed to its oil supply cut agreement with OPEC and would not raise its output unless in co-ordination with the exporting group.

Venezuela's oil output sank to a new long-term low last month due to US sanctions and blackouts, with production plunging to 960,000 bpd in March, a drop of nearly 500,000 bpd from February.

Oil prices rose on Wednesday after USA data showing a hefty drawdown in gasoline stocks overshadowed crude inventories rising to their highest levels in more than a year, and as sanctions and blackouts in Venezuela helped tighten global supply.

U.S. West Texas Intermediate (WTI) crude oil futures climbed 24 cents to $64.22 a barrel.

Saudi Arabia has slashed its oil production by more than promised as part of a pact to boost oil prices, the International Energy Agency said Thursday, while warning of mixed signals for global demand.

Brent and WTI futures have risen by 40% and 30% respectively since the start of the year.

Oil prices raced on Wednesday to five-month highs hit the previous day as the Organisation of Petroleum Exporting Countries (OPEC) production cuts and United States (U.S.) sanctions on Iran and Venezuela continued to tighten supply, though economic worries increased.

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Global oil demand is estimated to average 99.91 million b/d this year, compared with 98.70 million b/d in 2018, OPEC said.

"Even though the crude oil inventory rise was almost equal in size, the focus of the complex, as we head into peak summer driving season, is gasoline", said John Kilduff, a partner at Again Capital LLC in NY.

The average daily oil production reached 793,000 barrels in January, 806,000 barrels in February and 792,600 barrels in 2018, the Ministry of Energy said.

The figures could add to a debate within the so-called OPEC+ group of producers on whether to maintain oil supply cuts beyond June. Yet the gains have been capped by fears about global economic growth, which the International Monetary Fund predicts will this year be the weakest since the financial crisis a decade ago.

USA crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.

The country's crude oil production also remained at a record high level of 12.2 million barrels per day during that period, according to the EIA.

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