Oil rises above $71 on tight supply

Oil rises above $71 on tight supply

Supply cuts by OPEC and partners led by Russian Federation, plus involuntary curbs in Venezuela and Iran, have helped drive a 32 percent rally in crude prices this year, prompting pressure from U.S. President Donald Trump for the group to ease its market-supporting efforts.

OPEC production meanwhile fell by 0.55 mbd in March to 30.13 mbd - a four-year low - largely due to cuts in Saudi Arabia and crisis-hit Venezuela, the IEA said.

"Global demand has weakened and existing tariffs on Chinese goods shipments to the US are providing an additional drag, " rating agency Moody's said on Monday, although it added that Chinese stimulus measures would likely support growth over 2019.

Meanwhile, the latest EIA report showed that the U.S. crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017.

Despite this growth in U.S. supply, global oil markets remain tight amid supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), U.S. sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.

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 sanctions by the United States.

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Global oil demand is estimated to average 99.91 million bpd this year, compared with 98.70 million bpd in 2018, OPEC said.

"Even though the crude oil inventory rise was almost equal in size, the focus of the complex, as we head into peak summer driving season, is gasoline".

U.S. oil inventories surged last week, but the increase was nearly completely offset by drops in product stockpiles.

Despite the OPEC-led cuts and US sanctions, not all regions are in tight supply.

The U.S., Brazil, Russia, UK, Australia, Ghana, Sudan and South Sudan, will be the main drivers of supply growth this year, with U.S. crude production to rise by 1.46 million b/d in 2019 to 12.42 million b/d."The highest incremental production is expected in the Gulf Coast, albeit at a slower pace compared to a year ago due to the pipeline constraints in Permian Basin", it added. The International Energy Agency said that while global supplies are tightening for now, the agency could lower its forecasts because of economic threats.

The United States and China have yet to find a solution to their dispute on trade, while the International Monetary Fund on Tuesday cut its global economic growth forecasts.