Oil Prices Slip as U.S. Stocks Surge, but Global Market Tightens

Oil Hits a Five Month High as Libya Clashes Add to Supply ConcernsMore

Oil markets have tightened this year because of USA sanctions on oil exporters Iran and Venezuela, as well as supply cuts by OPEC and some non-affiliated producers including Russian Federation, a group known as OPEC+.

American benchmark West Texas Intermediate was at $64.31 a barrel at the same time for a 0.05% loss after closing the previous session at $64.34 per barrel.

Though oil prices like the Brent Crude and Nigeria's Bonny Light traded above $71 yesterday, Nigeria needs to ramp up production albeit the agreed OPEC cuts to meet its fiscal responsibilities.In its monthly oil market report, OPEC estimates demand for its crude to average 30.30 million b/d in 2019, a fall of 1.05 million b/d on the year, signifying that oil inventories are going to decline sharply, pointing to a very tight market.

"With geopolitical risks continuing to impact production from Venezuela and Iran and now also potentially Libya and even Algeria, the crude oil market is likely to remain supported until the price reaches a level that is satisfactory for OPEC and Russian Federation", said Ole Hansen, commodity strategist at Saxo Bank.

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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.

The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices, but also involuntary curbs from Venezuela and Iran - which are exempt from the OPEC cut pact - due to USA sanctions.

In Iran, hit by US sanctions, output was slight down, falling 28,000 b/d to 2.70 million b/d in March.Fellow exempt member Libya pumped 1.098 million b/d in March, up 196,000 b/d from the previous month, but output remains at risk as the country is on the brink of a possible civil war.

Citing that a Libya tension is fanning the flames of investors' optimism, an oil price analyst, Tamas Varga of PVM said, "Libya's oil production and exports have not been jeopardized but the rise in tension is enough to send oil prices higher".

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The figures could add to a debate within OPEC+ about whether to maintain oil supply cuts beyond June. The group pegged 2018 global oil demand growth at 1.41 million bpd.

The bank said it expected Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.

USA crude stockpiles last week rose to their highest level since November 2017 as imports grew, while gasoline inventories posted the steepest drawdown since September 2017, the Energy Information Administration said.

At 456.5 million barrels, USA crude oil inventories were at the five-year average for this time of year.

Israeli PM Netanyahu wins national election
Rival Gantz, 59, earlier also claimed victory, citing preliminary exit polls that showed his party had won more seats than Likud. Arab leaders accused Netanyahu of demonizing the country's Arab community, which is about 20 per cent of the population.

There are also concerns that an economic slowdown will soon dent fuel consumption after the International Monetary Fund this week downgraded its global growth forecast to the lowest in a decade.

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