Oil Price And The Global Economy In 2019

Oil Price And The Global Economy In 2019

The West Texas Intermediate for February delivery increased 0.56 US dollar to settle at 48.52 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery rose 0.27 dollar to close at 57.33 dollars a barrel on the London ICE Futures Exchange. "Stripping out Qatar, which exited OPEC at the end of the month, and Iran, Libya and Venezuela, which were granted exemption from the latest round of cuts, the remaining 11 members pumped 26.89 million b/d-almost 1 million b/d above their collective ceiling of 25.94 million b/d, which went into effect January 1", the survey showed.

The oil prices are drawing support from an agreed supply cut by OPEC, as well as some non-member countries such as Russian Federation and Oman.

The Saudi early production cut last month provided temporary support to oil prices, with both global benchmark Brent crude futures and US -benchmark, West Texas Intermediate (WTI) futures gaining on Tuesday. with WTI futures up $1.05, or 2.16 percent, to $49.57 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.56 to $49.52 a barrel, a 3.3 percent gain.

Oil held gains after its longest rally in nearly 1.5 years. The output cuts presented on behalf of OPEC and the partner states failed to get over this trend.

Opec and sovereign producer allies outside the exporters' group led by Russian Federation agreed in December to cut production to the tune of 1.2 million barrels per day starting January for a period of six months.

But looming over the OPEC-led cuts is a surge in US oil supply, driven by a steep rise in onshore shale drilling.

"Crude oil prices have benefited from OPEC production cuts and steadying equities markets", said Mithun Fernando, investment analyst at Australia's Rivkin Securities.

Rising production from North American shale basins, particularly the USA, which surged past 11 million bpd in August, outpaced sovereign producers Saudi Arabia and Russian Federation and was one of the factors behind the market's oversupply, the report said.

"When stock markets are strong oil usually follows suit", PVM Oil Associates strategist Tamas Varga said.

"Very high Saudi and Russian production, in particular, has heightened supply volatility, so whether Opec and Russia maintain production discipline and renew agreements to limit output are key concerns going into the new year", said Steve Wood, Moody's managing director, oil and gas.

S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 and $50 per barrel for Brent and WTI, respectively.

As a result, United States crude oil production rose by a whopping 2 million barrels per day (bpd) previous year to a world record 11.7 million bpd.

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