Oil prices rise on Sino-American trade hopes, upbeat China data

Crude Oil

Crude Oil

World oil markets have been on a rollercoaster ride in recent months, with the OPEC+ group agreeing to cut back production again from January in order to reverse a slump in oil prices on abundant production and worries about slower global growth.

US sanctions on Venezuela's state-owned oil company are tightening the global oil market and sending refiners around the world scrambling to find replacements for the country's diesel-rich heavy and extra heavy crudes.

The IEA left its demand growth forecast for 2019 unchanged from its last report in January at 1.4 million barrels per day. They closed up 1.5 percent on Wednesday, having touched their highest since February 5 at $54.60 a barrel.

In January, Falih said Saudi Arabia went beyond its commitment to lower both the production and exports of oil over the last couple of months.

Oil prices inched up on Thursday, buoyed by hopes that potential progress in the latest Sino-U.S. tariff talks would improve the global economic outlook.

"With so far no sign of change in government, we see increasing risks that production losses could be larger and sooner than our forecast for a 0.33 million-bpd supply loss in 2019", United States bank Goldman Sachs said in a note on Wednesday.

"In quantity terms, in 2019, the U.S. alone will grow its crude oil production by more than Venezuela's current output". The rally came as the International Energy Agency warned that turmoil in Venezuela could disrupt global flows of heavy crude and after Saudi Arabia said it would extend its own cuts.

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.

The rapid growth in USA production, led by shale oil output, has led to an unwelcome build-up in inventories of crude and refined products while refining margins for the gasoline it yields have collapsed around the world.

The IEA said it expected global oil demand this year to grow by 1.4 million bpd, while non-OPEC supply will grow by 1.8 million bpd.

Output has gone into free fall as the country's isolation has increased, shrinking from 2.4 million bpd in 2016 to 2.0 million bpd in 2017 and 1.5 million bpd in 2018, according to the Joint Organisations Data Initiative.