Oil demand growth may be slowed by prices above $70

Kenny Grant
April 15, 2019

Oil prices rose on Friday as market sentiment was boosted by a huge deal in the energy industry amid continued signs of tightening global supplies.

In its April report the IEA maintained its forecast for oil demand growth in 2019 at 1.4 million barrels per day.

After closing the previous session at $70.98 a barrel on Thursday, global benchmark Brent crude gained 0.2% to trade at $71.12 per barrel at 0630 GMT.

RPC Capital Markets said it expected crude Brent and West Texas' average price to be $75 and $67 per barrel until the end of this year, but indications are leaning towards a rise in prices.

The kingdom has decreased production by 1.30 million bpd since November when it pumped a record high of 11.09 million bpd.

Some analysts also wondered if the Libyan conflict was being overplayed.

On Thursday, the 11th of April 2019, both United States and UK crude fell more than one percent after sources had revealed that the OPEC, a 14-nation pact of petroleum exporting nations, had been giving a second thought over their production cut policy until the end of 2019.

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OPEC, along with Russian Federation and other non-member countries, is trying to keep 1.2 million barrels per day (b/d) off the market through June, following a collapse in crude prices at the end of 2018. The producers are due to meet on June 25-26 to decide whether to extend the pact.

Russian President Vladimir Putin's remarks this week that Moscow was against "uncontrollable oil price increases" was also a red flag to Jakob. He described oil market conditions at present as a "forecasting nightmare".

Siluanov said oil prices could drop to $40 per barrel or even less for up to one year.

"An increase is on the table, yes, if prices went to $80 and higher", this OPEC source said.

Venezuela is an OPEC member but exempt from the cuts as it struggles with political turmoil, sanctions and repeated power blackouts.

"We think that the Russian comments of this week are a sign that we are starting to approach this zone of divergence of interest (with Saudi Arabia), which will make it hard to maintain the OPEC+ agreement above current prices".

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