You are here: Home » Reuters » News
Business Standard

Oil prices rise on OPEC output cuts, as U.S. sanctions bite

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - prices rose on Tuesday amid OPEC-led supply cuts and U.S. sanctions against and Venezuela, although analysts expect surging U.S. production and concerns over economic growth to keep markets in check.

U.S. Intermediate (WTI) futures were at $52.78 per barrel at 0329 GMT, up 37 cents, or 0.7 percent, from their last close.

The ongoing closure of parts of the that brings Canadian into the also helped prop up WTI, traders said.

International Brent crude futures were up 50 cents, or 0.8 percent, at $62.01 per barrel.

Analysts said markets are tightening amid voluntary production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and because of U.S. sanctions on and

But some said supply-side risks were not receiving enough focus.

"We believe that oil is not pricing in supply-side risks lately as markets are currently focused on U.S.-trade talks, ignoring the risks currently in place from the loss of Venezuelan barrels," U.S. said in a weekly note.

Should U.S.-talks to end trade disputes between the two nations have a positive outcome, the said would "switch attention from macro concerns impacting future demand growth to physical tightness and geopolitical risks impacting immediate supply".

With OPEC engaged in and the entangled in political conflicts while production outside the group surges, of America Merrill Lynch said OPEC's global market share would fall as its outright output drops to 29 million barrels per day (bpd) in 2024 from 31.9 million bpd in 2018.

Growing U.S. supply and a potential economic slowdown this year could cap

"The worries of oversupply stemming from the U.S. will likely remain a dominant theme as we approach the warmer months," said Edward Moya, at

U.S. bank said the surge in U.S. crude oil production, which tends to be light in quality and which rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd, had resulted in overproduction of gasoline.

"Light crudes naturally yield more gasoline, and together with relatively modest demand-growth, this has driven gasoline stocks sharply higher and crack spreads sharply lower in recent months," said.

Refining profits for gasoline have plunged since mid-2018, going negative in and Europe, amid tepid demand growth and a surge in supply.

As a result, said "low refining margins and weaker economic data means can rally only so much (and) we continue to see modest upside for Brent to $65 per barrel in the second-half (of 2019)".

also warned of "a significant slowing in growth globally", adding that it expected Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.

(Reporting by Gloystein; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, February 12 2019. 09:02 IST
RECOMMENDED FOR YOU