Global Oil Market - April 16

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Global Oil Market - April 16

Post by dan_s »

By Alex Lawler after the markets closed in London. He is talking about Brent. WTI is now trading at about a $7.60/bbl discount to Brent. I do expect the gap between WTI and Brent to shrink if the civil war in Libya takes more of their light oil off the global market. - Dan

LONDON (Reuters) - Oil edged above $71 a barrel on Tuesday, supported by falling Venezuelan and Iranian exports and fighting in Libya that raised concerns of more supply threats, outweighing expectations of higher U.S. inventories.

In Libya, fighting between Khalifa Haftar's Libyan National Army and the internationally-recognized government has raised the prospect of lower supplies from another OPEC member. U.S. sanctions on two others, Iran and Venezuela, are cutting shipments.

"Collapsing Venezuelan oil output and sanctioned Iranian exports have a put big question mark over supply," said Norbert Ruecker of Swiss bank Julius Baer. "With the many supply threats, the market mood turns more bullish by the day and this should support prices over the coming weeks."

Brent crude, the global benchmark, was up 19 cents at $71.37 a barrel at 1224 GMT. U.S. West Texas Intermediate (WTI) crude gained 30 cents to $63.70.

Adding downward pressure were expectations of higher U.S. inventories and concern about Russia's willingness to stick with OPEC-led supply cuts.

Analysts on average expect U.S. crude stockpiles to have risen by 1.9 million barrels last week, the fourth straight increase. The first of this week's stockpile reports is due at 2030 GMT from the American Petroleum Institute.

While OPEC-led supply cuts have boosted Brent by more than 30 percent this year, gains have been limited by worries that slowing economic growth could weaken demand for fuel.

Oil fell on Monday after comments from Russia raised concern the OPEC-led supply-cutting pact may not be renewed.

Russia and the producer group may decide to boost output to fight for market share with the United States, TASS news agency сited Finance Minister Anton Siluanov as saying. < My take is that OPEC+ lost a lot of money the last time they tried to fight for market share with the U.S. Saudi Arabia lost over $200 Billion when they caused the oil surplus 2014 to 2016. - Dan.

The Organization of the Petroleum Exporting Countries and other producers including Russia, an alliance known as OPEC+, have been cutting output since Jan. 1. They decide in June whether to continue the arrangement. < Per IEA, we are going to need more oil from OPEC+ in 2H2019 to avoid a serious oil shortage late this year. - Dan.

"There is a growing concern that Russia will not agree on extending production cuts and we could see them officially abandon it in the coming months," said Edward Moya, senior market analyst at OANDA. < I think there is very little chance of Russia pulling out of OPEC+ because Putin sees it as a chance to gain more influence in the Middle East. That said, I think that there is a HIGH chance of the OPEC+ group raising production quotas in 2H 2019 just because the global market will be able to absorb more oil supply without causing lower oil prices. Saudi Arabia and Russia both want $80/bbl Brent. My SWAG is that we see $80 Brent by the end of June. - Dan.
Dan Steffens
Energy Prospectus Group
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