Oil set for weekly gain as Opec+ meets to extend production cuts

No Shortage of Oil

Experts point out that the OPEC cuts, with a goal of not supplying the market with 1.2 million barrels of oil a day during the first six months of the current year, constitute the key factor in the upward trend that has characterized the hydrocarbon price in recent weeks.

Brent crude oil prices on Thursday hit their highest so far this year, pushed up by ongoing supply cuts led by OPEC and by U.S. sanctions against Venezuela and Iran.

US West Texas Intermediate crude futures were at $58.54 per barrel, up $0.28 or 0.48%.

Moreover, US crude oil production fell modestly for the week ended March 8.

Oil gained for a second straight week as Opec assured traders it's committed to culling supplies ahead of a key meeting with allies in Azerbaijan this weekend, said a report.

For 2020, the government said it expected USA crude oil demand to rise by 220,000 bpd to 21.03 million bpd, unchanged from previous forecasts.

This led to the US taking a number of steps in the 1980s to take away OPEC's monopoly in determining oil prices, and the USA has strengthened global commodity markets with Chicago and NY.

It said a comfortable supply cushion by OPEC could prevent any price rally in case of possible disruptions and that non-OPEC oil output growth led by the United States should ensure demand is met.

"According to secondary sources, total OPEC-14 preliminary crude oil productions averages 30.55 million bpd in February, a decrease of 221,000 bpd over the previous month", the Organization of the Petroleum Exporting Countries said in the report.

In a monthly report, the Organization of the Petroleum Exporting Countries said 2019 demand for its crude would average 30.46 million barrels per day, 130,000 bpd less than forecast last month and below what it is now producing.

Since 2016 the OPEC+ nations have agreed on a series of output limits in an effort to counteract the collapse of oil prices in 2014 caused by overproduction.

But oil prices have been capped by concerns that an economic slowdown will soon start denting growth in fuel demand. If the oil rig count fall continues further, it might drag United States crude oil production in the coming weeks.

Goldman Sachs said growth in global demand for crude in January was "nearly 2.0 million barrels per day, with strength visible in both emerging markets and developed economies".

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