Oil prices rise as market tightens, but demand concerns linger

Image of oil daily chart

The West Texas Intermediate for May delivery gained 0.31 US dollar to settle at 63.89 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery climbed 0.72 dollar to close at 71.55 dollars a barrel on the London ICE Futures Exchange.

Oil markets are tightening amid the increasing effectiveness of USA sanctions on Iran and Venezuela, the International Energy Agency said yesterday.

Oil markets have been pushed up by more than a third this year by supply cuts led by the OPEC, US sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.

The IEA maintained its forecast for global oil demand growth in 2019.

Brent and WTI have risen by around 30 and 40 percent respectively since the start of the year.

Current oil demand stands around 100 million bpd.

Oil prices fell on Thursday, pressured as US crude stockpiles surged to their highest levels in nearly 17 months amid record production and as economic concerns cast doubt over growth in demand for fuel.

There is worldwide shortage in the oil market due to the interventions in production by the oil cartel OPEC. Conflict between the U.S. and Iran could have also helped boost oil prices considering the risk of President Trump extending Iranian restrictions. Demand is expected to grow by 1.4 percent per day.

Russian Federation and OPEC may decide to boost production to fight for market share with the United States but this would push oil prices as low as $40 per barrel, TASS news agency сited Russia's Finance Minister Anton Siluanov as saying on Saturday. Moreover, news out that Russian Federation has shied away from committing to extend oil production cuts along with OPEC could also weigh adversely on crude prices if this risk materializes.

Angola's oil production saw a marginal increase last March of 7000 barrels per day (bpd) to 1.454 million bpd, according to secondary sources, the Organization of Petroleum Exporting Countries (OPEC) said.

In 2018 OPEC+ chose to increase output at its mid-year meeting, only to return to production cuts in 2019.

Iraq's production fell marginally to 4.52 million bpd in March, slightly above its quota of 4.51 million bpd, according to OPEC secondary sources.

Libya, which is also exempt from the deal, pumped 1.098 million bpd in March, up 196,000 bpd from the previous month, but output remains at risk as the country is on the brink of a possible civil war.

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