In its monthly report, Opec said it produced 797,000 fewer barrels per day in January than in the previous month, a decrease in line with the cartel's pledge to curb output in a bid to boost sagging prices.
Markets are tightening because of voluntary production cuts, effective since January 1, led by the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russian Federation, aimed at forestalling a global glut.
Brent crude futures rose 88 cents to $63.30 a barrel by 0950 GMT, while United States crude oil futures gained 66 cents to trade at $53.76 a barrel. OPEC is lowering output by 800,000 bpd from January 1.
Saudi Arabia intends to begin exploring for and producing oil and gas overseas, the kingdom's energy minister has said.
"Oil production is rapidly falling and companies that normally resell Venezuelan crude have not found ways to mitigate the effect of the United States sanctions", Barclays bank said.More news: Open Beta Confirmed for The Division 2
Reports stated that Saudi Arabia will reduce its oil production to around 9.8mbpd in March (10.25mbpd according to Refinitiv), as such, this would see Saudi crude production 500kbpd below its 2019 target (10.311mbpd).
The IEA further added that traders shouldn't expect USA sanctions against Venezuela to fuel a rally in oil prices.
Nigeria, Africa's largest oil producer has $60 per barrel oil benchmark for this year's budget.
Venezuela's crude production slumped from 3.8 million barrels per day in 1970 to just 1.7 million bpd in 1985, recovering to 3.4 million bpd in 1998 before slumping again to 2.1 million bpd in 2017.
Additionally, the International Energy Agency said energy market participants may be able to adjust to USA sanctions against Venezuela's crude industry.More news: New York Gov. Cuomo to urge Trump to rethink tax changes
Venezuela has tried to find alternative customers, especially in Asia, but under US pressure many buyers there are also shying away from dealing with PDVSA.
The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly.
"Despite the forecast global oil inventory draws in February and lower forecast OPEC crude oil production in 2019 compared with the January STEO, EIA forecasts that USA crude oil production growth will offset decreases in OPEC production throughout the forecast".
In effect, sanctions have shifted the balance of global oil production in the direction of lighter crudes, at the same time that the economy and forthcoming regulations are pushing refinery demand towards heavier grades.More news: Mickelson leads by three at Pebble Beach
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