Oil Below 2019 highs on OPEC Cuts

Tuesday, February 19, 2019

U.S.-China trade talks this week also in focus.

Oil was close to its 2019 high of almost $67 a barrel on Tuesday, supported by OPEC-led supply cuts although gains were capped by concerns about slowing economic growth that could hit demand.

The supply curbs led by the Organization of the Petroleum Exporting Countries have helped crude oil prices to rise more than 20 percent this year. U.S. sanctions against OPEC members Iran and Venezuela have also tightened the market.

Brent crude slipped 21 cents to $66.29 a barrel by 1249 GMT, not far from the 2019 high of $66.83 reached on Monday. U.S. crude was up 44 cents at $56.03.

"The market is slowly regaining its bullish footing, subject to the perception of economic risks tied to U.S.-China trade talks," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.

Demand-side worries remain the main drag on prices. HSBC Holdings warned on Tuesday that an economic slowdown in China and Britain would throw up further hurdles this year.

More talks between the United States and China to resolve their trade dispute will take place in Washington on Tuesday. Traders said they were cautious on taking large new positions before the outcome of the talks.

"If they falter, we run the risk of sell-offs like we had in December," Tchilinguirian said.

OPEC last week lowered its forecast for growth in world oil demand in 2019 to 1.24 million barrels per day and some analysts believe it could be weaker still.

"Given a continuously uncertain economic picture, our already relatively bearish outlook for 2019 of below 1 million bpd in global oil demand growth may be subject to further downwards revisions," analysts at JBC Energy said.

To stop a buildup of inventories that could weigh on prices, the group of OPEC and non-OPEC producers known as OPEC+ began a new supply cut of 1.2 million bpd on Jan. 1.

Top crude exporter Saudi Arabia has sharply reduced production and exports to ensure that the deal gets off to a strong start.

In keeping with that aim, the kingdom plans to reduce light crude oil supplies to Asian customers for March, two sources with knowledge of the matter said on Tuesday.

U.S. sanctions against exporters Iran and Venezuela have provided additional support to the market.

Venezuela is a major crude supplier to U.S. refineries. Iran's exports, while down steeply since the sanctions began in November, have actually risen in early 2019, according to tanker data and sources.


By Alex Lawler, Henning Gloystein and Colin Packham

Categories: Contracts Energy Offshore Energy Activity OPEC

Related Stories

Inpex Secures Environmental Approval for Indonesia’s Abadi LNG Project

Dolphin Drilling, Vantris Ink Marketing Deal for Blackford Dolphin Semi-Sub

Malaysia Offers Nine Exploration Blocks in 2026 Bid Round

Seatrium Unit Launches Arbitration Against Petrobras over FPSO Contract

Malaysia Oil and Gas Projects Advance with Petronas' PSC and Farm-Out Deals

EnQuest Secures Extension for Vietnam's Offshore Block

Eni Enlists Shearwater for 3D Seismic Survey in Timor Sea

MODEC Forms Dedicated Mooring Solutions Unit

Eneos Warns on Skyrocketing Costs fo Offshore Wind

Sponsored: Record Deals and Record Attendance Underscore ADIPEC’s Global Impact

Current News

Inpex Secures Environmental Approval for Indonesia’s Abadi LNG Project

MISC Secures Long-Term Charter for Papua New Guinea's First FSO

Dolphin Drilling, Vantris Ink Marketing Deal for Blackford Dolphin Semi-Sub

Saipem Agrees $272M Deal to Acquire Deep Value Driller Drillship

DUG Hooks Multi-Client Seismic Reprocessing Survey off Malaysia

MISC, PTSC Extend Ruby II FPSO Operations Offshore Vietnam

Petronas Takes Operatorship of Oman’s Offshore Block 18

Mubadala Hires SLB for Deepwater Drilling Services Offshore Indonesia

Malaysia Offers Nine Exploration Blocks in 2026 Bid Round

Seatrium Unit Launches Arbitration Against Petrobras over FPSO Contract

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com