Oil Edges Up As Market Eyes Tighter Supply

Oil Edges Up As Market Eyes Tighter Supply

Oil Edges Up As Market Eyes Tighter Supply

They touched their highest level in more than two months at $55.75 the previous day.

International Brent crude oil futures on Monday were down 20 cents, or 0.32 percent at 0339 GMT to $62.54 a barrel, after closing up 3.14 percent in the previous session to their highest close since November 21.

Brent crude futures dropped 24 cents, or 0.38 percent, to settle at $62.51 a barrel.

“With or without any OPEC+ cuts, the market will want to see tangible evidence of a tighter supply/demand balance before shifting the recent price band higher, with USA crude stocks still well above the five-year average to start the year, ” said Fraser, in a Tuesday note.

Also weighing on crude prices, the American Petroleum Institute said United States crude oil supplies rose by more than 2.5M barrels during last week, adding to the previous build. They also expect that gasoline and distillate inventories each posted gains of 1.7 million barrels.

"Basically it's a pretty supportive report", said Phil Flynn, oil analyst at Price Futures Group in Chicago.

Supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies since January have been supporting prices.

The producers' alliance, known as OPEC+, began cutting production from last month to avert a new supply glut. The officials also said those oil-producing nations would debate the proposal during the week of February 18 Vienna, with the potential for a final deal when they meet in April.

In an interview with Sputnik, Venezuela's National Representative to OPEC, the technical adviser at Venezuela's PDVSA company and Petroleum Ministry Ronny Romero spoke about the impact of the USA sanctions on the oil and gas giant.

"It would seem that the market is really not too anxious yet about the potential loss of Venezuelan barrels", analysts at JBC Energy wrote.

“The 2019 demand outlook for oil is not great, while the prospects of increased shale supply and competition elsewhere could drive prices further lower, ” he said. The political turmoil raises the risk of disruption to Venezuela's oil output.

The oil industry generally believes the curbs will help balance the market this year.

"Anything out of the State of the Union that hints at the US-China deal not working out, or more anti-trade rhetoric would be a negative for energy prices as demand would be lower if global growth keeps being downgraded", said Alfonso Esparza senior market analyst, OANDA.

Guyana, a country that now produces no crude, could pump more than OPEC member Venezuela in five years. March natural gas NGH19, +1.05% rose less than 0.1% to $2.662 per million British thermal units, following losses in each of the last four sessions .

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