Crude Oil Price Outlook Positive After Break Higher

Dwayne Harmon
April 4, 2019

Oil hit a 2019 high above $69 a barrel on Tuesday on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an Opec-led supply cut, and as the market became less anxious that demand may slow.

Oil climbed to a four-month high in NY as a further retreat in OPEC's production signaled that global markets are tightening. Though US industry data indicated that the nation's crude stockpiles increased last week, a fourth month of lower production from Opec is tightening global supplies.

U.S. West Texas Intermediate crude rose 22 cents, or 0.4 percent, to $62.80 cents a barrel, earlier rising to $62.90, the highest since November 7.

Earlier this week, a survey from Reuters said OPEC's oil production in March 2019 fell to its lowest level since February 2015. The global benchmark crude's premium over West Texas Intermediate widened to $6.89 a barrel for the same month.

The United States is considering more sanctions against Iran, whose oil exports have been halved by existing measures, an official said.

"The production cuts by OPEC plus are providing a nice backdrop here for higher prices and until we see USA production reassert itself, the easier move is higher for oil", said Edward Moya, senior market analyst at OANDA.

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Hedge funds and other money managers raised their net long U.S. crude futures and options positions to 243,209 in the week to March 26, the U.S. Commodity Futures Trading Commission (CFTC) said.

A day later, the EIA reinforced the build, predicting that oil inventories had increased by 2.8 million barrels.

USA crude oil stockpiles soared unexpectedly last week as imports climbed and production edged higher to a new record, the Energy Information Administration said on Wednesday.

Despite Russia curbing its oil production by 225,000 barrels per day (bpd) from its production levels in October, the Caspian region country still missed the target set under the deal reached with OPEC.

"On the demand side, easing economic slowdown fears are also offering support".

Data provided by the Energy Information Administration said crude inventories added 7.2 million barrels to 449.5 million barrels in the week ended March 29, leaving them at the five-year average, this followed the American Petroleum Institute's late Tuesday report of a 3 million barrel rise in inventories.

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