Published: Sun, March 17, 2019
Money | By Ralph Mccoy

Economic Uncertainty Marks Oil Price

Economic Uncertainty Marks Oil Price

The United States is set to drive global oil supply growth over the next five years, adding another 4 million barrels per day (bpd) to the country's already booming output, the IEA outlook noted. "WTI has reached a new swing high of $58.95 per barrel Friday morning after OPEC announced it will stay committed to supply cuts until the June OPEC meeting", Amir Hekmati, trader at TradeFlow, told UPI.

The U.S. bank said January global crude oil demand growth was "nearly 2.0 million barrels per day, with strength visible in both emerging markets and developed economies".

In the Middle East, the United States aims to cut Iran's crude exports by about 20 percent to below 1 million barrels per day (bpd) from May by requiring importing countries to reduce purchases to avoid U.S. sanctions, two sources familiar with the matter told Reuters.

In a bid to force Maduro to leave office, the United States slapped sanctions on Venezuela and its national oil industry in January, blocking exports of its oil to USA customers. This translates to a serious weakening of both Russian Federation and Saudi Arabia's hands in terms of dominating both production and global oil prices.

For 2020, the government said it expected U.S. crude oil demand to rise by 220,000 bpd to 21.03 million bpd, unchanged from previous forecasts. We will observe the economic-political consequences of the USA cornering Saudi Arabia, Iran and Venezuela in the global oil game.

With a nationwide blackout that paralysed the country for one week, demonstrating the unreliability of the country's electricity network, new questions are being raised about Venezuela's ability to continue to produce and export oil.

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"The market is taking a pause as it tries to digest mixed reports that give us different ideas of future supply and demand", said Phil Flynn, an analyst at Price Futures group in Chicago.

During President Obama's term, the US, which changed its policy after more than 40 years in 2013, in addition to lifting the ban on oil and natural gas exports, has also made a decision to turn into an economy that will meet only 11 percent of its annual energy needs with imports by 2020 from an economy that was responding to its annual energy demand of 65 percent with imports in 2013. With increasing competition, the global demand for OPEC production will not return to pre-2016 levels during the period in question.

'While oil demand is expected to grow at a moderate pace in 2019, it is still well below the strong growth expected in the non-OPEC supply forecast for this year, it said. However, the USA suddenly announced waivers on November 5, leading to new concerns about oversupply and to plunges in crude prices until the end of past year. Meanwhile, Saudi Arabia announced it will continue to curb production and American sanctions have isolated two major exporters, Venezuela and Iran, said the Bloomberg report.

Energy markets are being buffeted by a number of economic crosswinds.

USA crude oil production also dipped, falling by 100,000 barrels per day (bpd) to 12 million bpd. Production in Iran and Libya, also exempt, was little changed.

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