Crude Oil Price Forecast - Crude oil markets struggle on Friday

Ann Santiago
April 15, 2019

London-traded, the global benchmark for oil, was up 66 cents, or 1%, at $71.49.

"We tend to focus on Trump's reaction to gasoline prices, but the Russian government is also continuously anxious about the street discontent factor that comes with rising gasoline prices", Jakob said.

OPEC's largest producer Saudi Arabia saw its output dropping to its lowest in over two years, boosting compliance with supply cuts to 153%, according to the IEA's Oil Market Report.

Earlier this week, the Energy Information Administration reported that USA crude inventories rose to their highest level since November 2017. Iranian supply could fall further after May if, as many expect, Washington tightens its sanctions against Tehran.

In December, OPEC and other major oil producers, including Russian Federation, pledged to cut production by 1.2 million barrels per day in order to prop up prices, effective from this January.

However, President Vladimir Putin seemingly softened that stance. The producers are due to meet on June 25-26 to decide whether to extend the pact.

"(Oil markets will remain tight) as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far", said Ole Hansen, head of commodity strategy at Saxo Bank.

Current oil demand stands around 100 million bpd.

Oil prices also gained support from continued signs of supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Oil markets have been lifted by more than a third this year by supply cuts led by OPEC, U.S. sanctions on oil exporters Iran and Venezuela, plus escalating conflict in fellow OPEC member Libya. Saudi Arabia is set on maintaining the production cuts into the second half of 2019, while Russian Federation refuses to commit to an extension.

A fourth OPEC source said there were talks about ideas such as whether OPEC should continue with the cuts alone, a deal extension of only three months to keep Russian Federation on board or pumping more if prices rise further.

But Putin, who's Russia's ultimate dealmaker, said he wasn't decided yet on how Moscow's cooperation with OPEC should go.

The glut of supply in the global oil market is falling after Saudi Arabia-led OPEC and Russia-led non-OPEC agreed on December 7 to trim their total output by 1.2 million barrels per day (bpd) for the first six months of 2019.

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