Opec oil production falls as Saudi Arabia slashes output

Opec oil production falls as Saudi Arabia slashes output

Saudi Arabia's Energy Minister, Khalid al Falih, told the Financial Times that the kingdom would reduce production to about 9.8million bpd in March, down from a record high of 11.1million bpd in November.

Goldman Sachs said on Tuesday, "With so far no sign of change in government, we see increasing risks that production losses could be larger and sooner than our forecast for a 0.33 million-bpd supply loss in 2019".

Heavy-sour supplies are common in OPEC, whose members started a new round of production cutbacks last month.

The barrel of West Texas Intermediate is up for the second session in a row today on the back of firm optimism over a potential agreement in the US-China trade talks, all despite latest news seems to leave the final decision to a Trump-Xi meeting.

"In quantity terms, in 2019, the US alone will grow its crude oil production by more than Venezuela's current output".

Oil production in Venezuela, which has been rocked by a crippling economic crisis, spiralling political turmoil and United States sanctions, meanwhile sank by 59,000 barrels per day.

The IEA noted that new USA sanctions announced in January on Venezuela's state oil company PDVSA have not so far caused market jitters.

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Compliance by non-OPEC participants was only 25 percent, however, it said.

Mars, a medium crude grade from the U.S. Gulf, has moved to a rare premium over Louisiana Light Sweet. Distillate inventories decreased by 2.481 million barrels versus an expected draw of 1.090 million barrels.

However, analysts are warning that record United States supply and anticipated economic slowdown later this year might start capping the world's oil markets.

The U.S. Treasury's guidance, which appears deliberately unclear, has left many third-country buyers uncertain about whether they can do business with PDVSA without also falling foul of sanctions.

In a monthly report, the Organization of the Petroleum Exporting Countries lowered its forecast for 2019 economic growth and said demand for its crude would fall to 30.59 million barrels per day, 240,000 bpd less than predicted last month.

The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly.

If refiners are unable to source enough heavy and extra heavy crude, they will buy the next best alternative, in this case medium density crudes, so the impact of sanctions is rippling through the entire oil market.

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