Global oil supply to swamp demand in 2019 despite output cuts: IEA

Venezuela's President Nicolas Maduro attends a military exercise in Charallave

Venezuela's President Nicolas Maduro attends a military exercise in Charallave Venezuela

Oil prices have struggled to rise amidst an oversupplied market. -China trade war will weaken demand.

Bank of America 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.

Saudi Arabia's Energy Minister, Khalid al Falih, told the Financial Times that the kingdom would reduce production to about 9.8million bpd in March, down from a record high of 11.1million bpd in November.

The total world demand in 2018 was 1.47 million barrels per day increase to 98.78 million barrels.

In its monthly report released yesterday, OPEC said its crude output fell 797,000 barrels per day (bpd) in January compared with the prior month.

In the meantime, the political rift between Venezuela and the United States continues with the US sanctions against the South American nation giving prices a slight boost.

The global economic growth forecast was revised down to 3.3 percent for 2019 and 3.6 percent for 2018, it said.

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Meanwhile, Barclays bank added, "Oil production is rapidly falling and companies that normally resell Venezuelan crude have not found ways to mitigate the effect of the US sanctions".

USA restrictions on Venezuela's energy sector should remove some 330,000 bpd in supply this year, according to Goldman Sachs.

With the actual loss of Venezuelan and some Middle Eastern crude, and the potential loss of Iranian barrels, the dilemma for Asian refiners becomes more acute.

Oil prices rallied yesterday amid signs that the Organisation of Petroleum Exporting Countries (OPEC's) production cuts are taking hold.

While US crude production is expected to grow by an amount that exceeds Venezuela's current output, the IEA warned that quantity is not the only important issue. In that letter to OPEC on January 29th, a day before United States inclined sanctions on Venezuelan state-owned oil firm PDVSA, Maduro wrote, "Our country hopes to receive the solidarity and full support of the member countries of OPEC and its ministerial Conference, in the fight we are now having against the illegal and arbitrary intrusion of the United States in the internal affairs of Venezuela". Even 1.5 million barrels puts Iran's economy in a bind and anything less than that will make the budget hard to manage.

Gasoline inventories for the same period rose 746,000 barrels.

Previous pacts by OPEC and its partners including Russian Federation, often called OPEC+, to cut back production have been marked by initial low compliance rates by certain countries. "USA producers are also so far guiding towards restrained shale production growth".

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