Global fuel market: still many uncertainties in both demand and supply

Oil Slips as America's Record Output Weighed Against OPEC+ Curbs

Oil Slips as America's Record Output Weighed Against OPEC+ Curbs

Researchers at Bernstein Energy said the supply cuts led by OPEC "will move the market back into supply deficit" for most of 2019 and that "this should allow oil prices to rise to USA $70 per barrel before year-end from current levels of US$60 per barrel".

Neil Atkinson, head of oil industry and markets division at International Energy Agency, told Bloomberg television that "We think during the first quarter of 2019, supply and demand will be fairly closely matched" as long as the supply cuts promised by the Organization of the Petroleum Exporting Countries are implemented.

Despite renewed hopes that a trade deal could be reached between the US and China by the March 2 deadline, it may still not be enough to offset the negative impact on China's economic growth.

In 2020, EIA expects oil production to increase by 1.7 million b/d because of production growth in the United States, Canada, Brazil, and Russian Federation, while overall OPEC crude oil production is expected to remain flat.

By Carlos Caminada and Alex Nussbaum Investors are the most optimistic on oil in two months as the worst fears that roiled markets at the end of the year start to dissipate.

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After the OPEC + decision on oil production cut was made, Brent crude price dropped by more than $10 to $49.3 per barrel.

Despite this, analysts said supply cuts led by OPEC would likely support crude oil prices. US crude production rose last week to a record 11.9 million barrels per day, as crude exports jumped close to record highs near 3 million bpd. "Confidence is weakening in several major economies", said the report.

Distillate stockpiles, which include diesel and heating oil, rose by 3.0 million barrels, versus expectations for a 1.6 million-barrel increase, the EIA data showed. While a prolonged government shutdown in the USA and uncertainties over the health of the global economy have rattled broader financial markets, oil prices have responded to signs that the Organization of Petroleum Exporting Countries and its allies have started to clear a glut.

Saudi Arabia has said its output will decline even further this month as the kingdom attempts to avoid an accumulation of excess oil inventories.

"Implementation of the output cut agreement agreed by the OPEC+ will remain supportive of oil prices", said Abhishek Kumar, senior energy analyst at Interfax Energy in London. "The US, which is already the largest liquids producer, will become at the beginning of 2019 the largest crude oil producer before Russian Federation and Saudi Arabia thanks to its unconventional crudes". The EIA says Venezuela's production could fall below 1 million bpd in the second half of this year before declining further to 700,000 bpd by 2020.

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