OPEC: Venezuela Reports Collapse in Oil Supply, Tightening Global Market

OPEC: Venezuela Reports Collapse in Oil Supply, Tightening Global Market

As of 1905 BST, front month West Texas Intermediate crude oil futures for May delivery were adding 0.89% to $64.55 a barrel, as similarly-dated RBOB gasoline on NYMEX snapped higher by 3.14% to $2.0617 a gallon and an advance of 1.46% to $71.64 for June-dated Brent.

Brent and WTI both hit their highest since November at $70.76 and $63.48 a barrel respectively early on Monday.

An OPEC monthly report released on Wednesday showed that Venezuela's oil output sank last month to a long-term low below 1 million barrels per day, due to USA sanctions and blackouts. The global benchmark crude was at a premium of $6.49 to WTI for the same month.

On Tuesday, the 9th of April 2019, during the midday Asia Pacific trading hours, Brent crude hit a five-month high above $71, while USA crude had resurfaced over $64.50 level for the first time after November 1st, 2018.

Oil markets have tightened this year as the United States imposed sanctions on oil exporters Iran and Venezuela while the producer club of the Organisation of the Petroleum Exporting Countries (OPEC) has been withholding supply to prop up prices.

Kingpin Saudi Arabia's production, meanwhile, fell by 324,000 bpd, according to OPEC's sources, the report said.

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"The increase in crude supplies still has to do with some of the logistical issues we had in Texas, along with refinery problems", said Phil Flynn, an analyst at Price Futures Group in Chicago. "Declines from these two exempt countries account for nearly 47 percent of the reduction seen from OPEC", ING said.

"The Russian camp is increasingly coy about extending supply cuts".

This compares to the more than a million barrels per day Venezuela was pumping at the start of the year, and its production capacity of almost two mbpd in 2017.

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

Besides, the USA crude had also experienced a five-month high to $64.51 on Tuesday (April 9th), largely led by a sanction on Venezuelan and Iranian crude amid a surging U.S. oil inventory.

On the demand side, there are concerns that an economic slowdown will soon hit fuel consumption. The forecast cut 0.2 percentage point from the IMF's outlook in January.

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