Month in brief

• Date: 01 April 2019
• DOI: http://doi.org/10.1111/oet.12676
• Published date: 01 April 2019

THE MONTH IN BRIEF

Month in brief

Oil prices stayed well-supported during March, helped

by falling Venezuelan exports and tight adherence to

the OPEC/non-OPEC quota deal signed in December.

Signs of slower than expected US output growth were

also supportive, but worries over the global economy

and slower than expected demand growth limited price

rises.

Venezuelan oil production slipped to 1.09 mn bd in

February, down 30% on the year, following the imposition

of US sanctions at the end of January, and is lower still in

March. US imports of Venezuelan crude averaged

122 000 bd in the first 2 weeks of March, down from about

half a mn bbl a day in December, according to US

customs data.

Nevertheless, OPEC and its allies decided on March

18 to maintain their 1.2 mn bd oil production cuts until

the end of June, when they will reconvene in Vienna to

decide on any extension of the cuts into the second half of

the year. But the International Energy Agency said OPEC

may have to tap into its 2.8 mn bd of spare production

capacity to prevent a market squeeze if Venezuela col-

lapses further.

Russian crude output fell 0.3% month-on-month to

11.34 mn bd in February, leaving output about 85 000 bd

under October 2018 levels, from which it has pledged to

trim 230 000 bd by April under the December deal. US

crude production rose by 100 000 bd in early March, back

to its all-time high of 12.1 mn bd. Libya also saw an increase

after the government restarted output at the country’s

Sharara Field, following a 3-month shut down due to unrest

in the area.

The trade dispute between United States and China and

slight downward revisions to global growth are softening

anticipated crude demand. OPEC revising projections for

2019 down to 99.96 mn bd—the first time it has dropped

below 100 mn bd since last July.

US commercial crude stocks nevertheless fell sharply

toward the end of the month, to slightly below the 5-year

average. An 846 000 bd surge in US exports to 3.39 mn bd

mid-month contributed to the crude draw.

In response to the tightening market, the US Depart-

ment of Energy said it would sell 6 mn bbl of light sweet

crude from its Strategic Petroleum Reserve. This is a rela-

tively small amount and does nothing to address the short-

age of the mostly heavy grades cut by OPEC and lost

from Iran and Venezuela. This shortage of heavy grades

has increased their price relative to lighter ones, such as

Brent and WTI.

Looking ahead, further decisions on extending Venezu-

elan sanctions and, especially, Iranian crude export exemp-

tions, will be key in determining market direction over

coming months, giving US policymakers considerable

influence over crude prices; alongside Saudi/OPEC. US

officials have already said their decision on whether to

renew sanctions waivers on Iranian crude purchases, which

expire May 5, may depend on how much Venezuelan

exports fall.

Oil and gas discoveries during the month include the

largest find in Indonesia for 18 years, at Repsol’s Saka

Kemang block in South Sumatra—estimated at 2 tcf recov-

erable. ExxonMobil made a major gas find, estimated at

6–8 tcf, off the coast of Cyprus in the Eastern Mediterra-

nean. There were also significant upgrades in reserve esti-

mates off the coast of Guyana.

How to cite this article: Month in brief. Oil and

Energy Trends. 2019;44:7. https://doi.org/10.1111/

oet.12676

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