Oil edges higher amid tightening global supply, gains capped by economic slowdown

Oil edges higher amid tightening global supply, gains capped by economic slowdown

Despite the surge in US supply and the economic concerns, global oil markets remain tight amid supply cuts led by the Organization of the Petroleum Exporting Countries (Opec), US sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya. But it said that the market remains oversupplied and warned of slowing demand growth. The group pegged 2018 global oil demand growth at 1.41 million b/d.OPEC also revised down non-OPEC oil supply growth in 2019 by 60,000 b/d "due to extended maintenance in Kazakhstan, Brazil, and Canada".

On the demand side, weak global economic growth expectations for 2019 put a downward pressure on oil prices. OPEC and Russian Federation moved in to compensate for what was expected to be a significant loss of Iranian oil supply.

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.

USA sanctions and power outages pushed OPEC member Venezuela's crude output to a long-term low of 870,000 bpd, the International Energy Agency said on Thursday, even lower than OPEC had reported the day before.

Meanwhile, close market watchers have predicted that oil price would continue to leap in the coming weeks, mainly because of crises in major oil and gas producing nations, especially because of crises in some oil producing nations, especially Libya, Venezuela and Iran.

In a monthly report released on Wednesday, the Organization of the Petroleum Exporting Countries said Venezuela told the group that it pumped 960,000 barrels per day (bpd) in March, a drop of nearly 500,000 bpd from February.

"Global demand has weakened and existing tariffs on Chinese goods shipments to the US are providing an additional drag, " rating agency Moody's said on Monday, although it added that Chinese stimulus measures would likely support growth over 2019.

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The kingdom also self-reported production of 9.79 million bpd, its lowest since January 2017 and a fall of 350,000 bpd month on month.

The group forecasts United States crude production to rise by 1.46 million bpd in 2019 to 12.42 million bpd.

The UAE now produces around 3 million bpd under the OPEC+ reduction agreement.

The kingdom has decreased production by 1.30 million bpd since November when it pumped a record high of 11.09 million bpd.

Goldman Sachs also said oil prices "will decline gradually from this summer as shale and OPEC production increases".

A key metric for the deal has been to lower oil inventories below the five-year average.

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