Oil up on diminished U.S. output estimate, stalled Venezuelan exports

By Noah Browning

LONDON (Reuters) – Oil prices rose on Wednesday, after an official forecast showed slower-than-expected U.S. production and U.S. sanctions stalled exports from Venezuela.

Brent was at $67.14 a barrel at 1320 GMT, up 47 cents or 0.7 percent. U.S. West Texas Intermediate was at $57.74 per barrel, up 87 cents or 1.53 percent.

Both benchmark crudes have climbed for three straight days and are near four-month highs.

The U.S. Energy Information Administration (EIA) said on Tuesday that U.S. crude production was expected to grow more slowly in 2019 than it had previously expected, averaging about 12.30 million barrels per day (bpd).

The EIA revised down its projected 2020 production figure from 13.20 million bpd to 13.03 million bpd.

“While the revision is small, the comforting part for bulls was that the direction of the revision was down rather than up,” Harry Tchilinguirian, global oil strategist at BNP Paribas (PA:BNPP) in London, told the Reuters Global Oil Forum.

U.S. crude stocks also fell unexpectedly last week, the American Petroleum Institute said on Tuesday, as supply from various producers was being curbed. The EIA posts its weekly statistics at 1430 GMT.

“The oil market maintained its buoyancy, thanks to Monday’s Saudi commitment to deep supply cuts and power outages in Venezuela crippling the loading of oil at key terminals,” Tchilinguirian said.

Oil prices have been pushed up this year by supply cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries.

Saudi Energy Minister Khalid al-Falih said on Sunday the production-curbing agreement would likely last until at least June. Saudi Arabia, the world’s top oil exporter, indicated on Monday that it would cut April exports.

Markets have been further tightened by U.S. sanctions against oil exports from OPEC members Iran and Venezuela.

Venezuela’s worst blackout on record has left most of the country without power for six days, with hospitals struggling to keep equipment running, food rotting in the tropical heat and exports from the main oil terminal stranded.

“Expectations are now rife that these blackouts are likely to sow the seeds for steeper production declines and even the potential for acute outages,” said Stephen Brennock of oil broker PVM.

“All the while, the pressure to find alternative buyers for its crude will ramp up as a March 29 deadline approaches for US refiners to halt their imports,” he said.