OPEC's Oil Exports to US Fall to Five-Year Low in January

OPEC's Oil Exports to US Fall to Five-Year Low in January

Prices, which settled at a one-week low on Tuesday, were trading at $53.20 before the supply data.

Brent for April settlement dropped 19 cents to $62.50 a barrel on the London-based ICE Futures Europe exchange, after adding 71 cents on Wednesday. USA crude output stayed at a record-high 11.9 million barrels a day. That was smaller than the 3.7 million-barrel rise expected by analysts polled by S&P Global Platts.

At 447.2 million barrels, USA crude oil inventories were about 6 percent above the five-year average for this time of year. But “the build is once again only modest, given stymied imports and strong exports.”. Almost 7.6 million barrels of Venezuelan crude is floating in the Gulf of Mexico, according to Kpler.

Prices have declined since October 3 when Brent traded at over $86 per barrel and WTI at over $76 per barrel.

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

“Looking ahead, the 2019 demand outlook for oil is not great, while the prospects of increased shale supply and competition elsewhere could keep the pressure on prices, ” he said. Concern about potentially slowing demand for crude oil has contributed to price reductions.

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“That being said, the downside could be limited as the OPEC and 10 partner producers outside the cartel are supposed to be actively managing output in an effort to rebalance the market, ” said Razaqzada.

The key story supporting the market and driving the price action is the OPEC-led production cuts.

"The market will struggle to compare disappointing API Inventory numbers against reports of a decrease in Venezuelan output, OPEC cuts, and weak economic data". Shrinking Iraqi imports and deep output cuts by Saudi Arabia fueled the decline. 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.

The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran past year, experts said on Friday after looking at details posted by the Treasury Department.

Scott Shellady, senior vice president at TJM Institutional Services, voiced the provocative suggestion that the market of late "is really taking a long term view" and that traders are anticipating that geopolitical events such as Venezuela will have specific outcomes (like Maduro losing control of the country and massive amount of crude coming back on line as a result).

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