Published: Sun, February 24, 2019
Markets | By Erika Turner

Oil prices stable on trade hopes, but record USA output weighs

Oil prices stable on trade hopes, but record USA output weighs

International Brent crude futures were at $67.18 per barrel at 1019 GMT, eight cents above their last close, but below $67.38 per barrel reached earlier this week.

Trade optimism prevails as U.S.

-Oil prices pushed toward fresh three-month highs Friday, helped by a slightly weaker USA dollar and global stock-market gains. "Anything positive on trade talks will boost the oil price".

OPEC: The price upswing since the start of the year has largely been supported by production cuts from the Organization of the Petroleum Exporting Countries - largely led by the oil-cartels de facto leader, Saudi Arabia. America is the only country to reach 12 million bpd of production.

Still, while the numbers would contribute to a bearish sentiment, analysts such as Abhishek Kumar, senior energy analyst at Interfax Energy, pointed out that OPEC in general is still supportive of prices, and "Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market".

US crude stocks rose 3.7 million barrels in the week to February 15, to 454.5 million barrels, the highest since October 2017, even as crude exports surged 1.2 million barrels per day to a record 3.6 million bpd.

OPEC and its de facto leader Saudi Arabia agreed late a year ago, along with producer allies such as Russian Federation, to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing. WTI recorded a 3-percent weekly rise and reached its strongest settlement price of 2019.

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American benchmark West Texas Intermediate (WTI) gained 1.9 percent over the week to trade at $57.41 a barrel at the same time after starting Monday at $56.33 per barrel.

The agency also said that USA crude stockpiles had built for a fifth straight week, climbing by 3.7 million barrels last week to 455 million barrels. Opec and some nonaffiliated producers such as Russian Federation agreed late previous year to cut output by 1.2-million bpd to prevent a large supply overhang from growing.

Another recent price driver has been United States sanctions against oil exporters Iran and Venezuela.

With U.S. supply surging, Goldman Sachs said it expected non-OPEC supply to grow by 1.9 million bpd this year, more than offsetting the OPEC cuts.

The bank said that some weeks could see 4.6 million bpd of gross crude exports by year-end, topping last week's record of 3.6 million bpd.

Given the supply and demand picture, Goldman said "we expect $60-$65 per barrel Brent prices, on average, in 2019 and 2020".

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