Crude oil stable as OECD inventories fall

Opec and its allies face some important decision making in the coming weeks. Luis Enrique Ascui  Reuters

Opec and its allies face some important decision making in the coming weeks. Luis Enrique Ascui Reuters

Senior oil and gas equity analyst Iain Reid at Macquarie Group said that the reason for the market being as tight as it is at the moment is due to Opec failing to "open the floodgates" to compensate for the lost Iranian barrels, but also the decline in production in Venezuela, another Opec nation.

Global benchmark Brent gained US$1.11 to settle at US$78.23 a barrel. "Plus we see a high likelihood of OPEC working with Russian Federation in 2019 to set a floor on oil prices".

Production levels will be a key topic of discussion at the upcoming June 22 OPEC ministerial meeting where the Vienna Agreement, which began in 2017, is expected to be discussed.

- Oil prices are at four-year highs, raising the price of producing gasoline. The renewal of sanctions is due to take between 90 and 180 days, with the most important limitation reportedly having to do with Iran engaging in financial operations with the United States dollar, as well as Iran's oil sales and other energy-related investments, including those through the Central Bank of Iran.

Oil has extended a rally this month to the highest level in more than three years as Mr Trump's decision to walk away from the Iranian nuclear accord fuelled tensions in the energy-rich Middle East and raised concerns over supply disruptions.

Most analysts surveyed by S&P Global Platts predict the sanctions will remove less than 500,000 b/d of oil supply from the global market by the November enforcement deadline, ranging from 100,000-200,000 b/d at the low end and up to 800,000 b/d at the high end.

In total, South Korea's April crude oil imports were 11.59 million tonnes, or 2.83 million bpd, up 2.5 percent from 11.30 million tonnes from 2017, according to the data.

The global oil picture has dramatically changed in the past year.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

"By 2019, U.S production can pick up as pipelines are expanded and OPEC and Russian Federation can bring back production", says Lee.

LaForge, from Wells Fargo Institute, says the supply-demand balance in the oil market is already shifting toward oversupply, given that growth in demand is limited by an economic expansion that at least in the U.S.is in its later stages. Higher crude oil prices, meanwhile, support the value for the eventual public offering of Saudi Aramco, the biggest oil company in the world.

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