Venezuela, Saudi oil output slumps: OPEC

Oil Hits a Five Month High as Libya Clashes Add to Supply ConcernsMore

Brent crude futures, the global benchmark for oil prices, were up 33 cents, or half a percent, at $70.94 USA per barrel mid-morning Wednesday.

Oil prices rose to their highest level since November 2018 on Monday, driven upwards by OPEC's ongoing supply cuts, USA sanctions against Iran and Venezuela, fighting in Libya as well as strong U.S.jobs data.

As a result, Brent and WTI crude oil futures have risen by around 30 percent and 40 percent respectively since the start of the year.

Russia, the largest non-OPEC supplier said on Tuesday that it prefers to increase supply when the current production cuts end in June.

OPEC and its allies in the production cut deal are committed to rebalancing the market and will not repeat last year's preemptive production increase to offset expectations of oil supply losses, Suhail Al Mazrouei, the energy minister of the United Arab Emirates (UAE), said on Wednesday.

The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices, but also involuntary curbs from Venezuela and Iran - which are exempt from the OPEC cut pact - due to US sanctions.

Data released by the Energy Information Administration this morning showed crude supplies in the US increased by 7 million barrels last week, significantly larger than the expected rise. "Declines from these two exempt countries account for nearly 47 percent of the reduction seen from OPEC", ING said.

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Citing that a Libya tension is fanning the flames of investors' optimism, an oil price analyst, Tamas Varga of PVM said, "Libya's oil production and exports have not been jeopardized but the rise in tension is enough to send oil prices higher".

The fly in the ointment is concern that global demand for oil could weaken if the world economy slows, as it seems to be doing.

"With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in USA exports, " said energy consultancy, FGE in a note.

USA crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.

In December, stocks were 28 million barrels above the five-year average, showing that the producer group has made progress in balancing the market.Also, U.S. total commercial oil stocks fell by 15.6 million barrels to stand at 1.229 billion barrels in March, according to preliminary data.

The International Monetary Fund said Tuesday it revised down its global economic growth forecast for this year to 3.3%, from its previous estimate of 3.5% in January.

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