The first week of 2019 has brought back some of the bullish sentiment that market watchers had given up on after three consecutive (and quite painful) weeks of losses. The reason for the recent oil rally lies in Saudi Arabia making good on its OPEC/OPEC+ promise to cut production. Total OPEC production has witnessed its steepest month-on-month decline in the last two years, dropping by more than 0.5mbpd to 32.6mbpd.
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As more countries fulfill their production cut commitments, the market tension should ease somewhat, even though the bullish factors will be partially counteracted by growing US crude stockpiles. Dated Brent rose by almost 10 percent week-on-week to reach 57.5 USD per barrel on Friday afternoon, whilst WTI finished the week trading at 48-48.5 USD per barrel, gaining some 7 percent from last Friday’s 45.3 USD per barrel.
1. Saudi Arabia Cuts February 2019 OSPs
- Saudi Aramco, the Saudi state oil company, has raised the prices for most of its February-loading cargoes, most notably hiking Asia-bound prices.
- Arab Super Light witnessed the biggest increase (down by 0.6 USD month-on-month), whilst Extra Light was raised by 40 cents due to recovering light distillate margins in Asia Pacific.
- Arab Light and Medium saw only modest increases by 10 cents, whilst Arab Heavy was cut by 30 cents.
- Arab Heavy was the only grade that saw price relief (similarly 30 cents per barrel) in NW Europe-bound cargoes, too, as Extra Light was hiked by 50 cents and the others were rolled over from last month.
- Interestingly, Saudi Aramco seems to be tightening the screws vis-a-vis the United States, as prices for all grades were raised for February 2019 by 15-30 US cents per barrel.
2. Libya hikes oil prices for January 2019
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- Libya’s National Oil Company has hiked official selling prices on all its grades loading in January 2019 by some 10-20 US cents per barrel.
- This comes on the back of Mustafa Sanalla cutting a deal with the Petroleum Facilities Guards that took over the 350kbpd El Sharara field in early December.
- The force majeure will most likely be lifted in the upcoming days, bringing the total discontinuation period to a month.
- Libya’s usual reference grade, Mediterranean Urals, started off 2019 quite robustly, trading at +0.2-0.3 USD per barrel premium over Brent…