USA crude stocks rise by 3.7 mln barrels

Oil near 2019 highs amid OPEC cuts, US sanctions on Iran and Venezuela

As output surges, USA oil stocks are also rising.

"Balancing the market, i.e. aligning the somewhat uncertain global demand growth and the somewhat erratic USA sanction policies toward Iran and Venezuela with the shale boom, rests on Saudi Arabia and its allies", said Carsten Menke, commodities research analyst at Julius Baer.

U.S. commercial crude oil inventories increased by 3.7 million barrels from the previous week to 454.5 million barrels, the U.S. Energy Information Administration said Thursday, which marked the highest level since October 2017.

Oil prices floated near 2019 highs on Thursday, supported by OPEC supply cuts that took effect in January, with the West Texas Intermediate (WTI) futures hitting $57.17 a barrel during midday trading - closing in on a high of $57.55.

On Tuesday, EIA forecast output from seven major US shale fields will rise by 84,000 bpd next month to 8.4 million bpd.

"We'll just have to watch trade talks in DC today".

"After the recent Fed Minutes, the USA dollar has sold off, lifting crude oil on news the Fed plans to hold off on rate hikes, and balance sheet reduction", he said. The US is the only country to have reached 12-million bpd of production to date.

Much of that growing output is coming from USA shale fields, where drillers use advanced methods to squeeze crude oil and natural gas from rock formations.

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Friday's dips at least temporarily halted a rally that pushed crude prices this week to their highest for 2019 so far amid the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC). "While a glut is taking hold in USA crude stocks, product stockpiles inched lower thanks to robust domestic demand", Mr. Brennock added.

OPEC and some non-affiliated producers such as Russian Federation agreed late a year ago to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

"We see total USA crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd", United States bank Citi said following the release of the EIA report.

In the previous week ending February 8, the EIA reported a buildup of 3.6 million barrels of USA crude oil inventories.

Another recent price driver has been U.S. sanctions against oil exporters Iran and Venezuela.

Goldman Sachs said in a note that it expects Opec output to average 31.1-million bpd in 2019, down from 31.9-million bpd.

That means much will depend on demand, which Goldman said it expected to grow by 1.4 million bpd this year. Goldman said it expected an average Brent price of $60-$65 per barrel in 2019 and 2020.

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