OPEC cuts 2019 oil demand forecast on global slowdown

Oil Near $52 After Worst Week Since December on Growth ConcernsMore

Oil Near $52 After Worst Week Since December on Growth ConcernsMore

Oil prices rose on Tuesday amid OPEC-led supply cuts and US sanctions against Iran and Venezuela, although analysts expect surging USA production and concerns over economic growth to keep markets in check.

An oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017.

International Brent crude futures were up 50 cents, or 0.8 percent, at $62.01 per barrel.

Analysts said markets are tightening amid voluntary production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and because of USA sanctions on Venezuela and Iran.

West Texas Intermediate (WTI) crude saw a 0.42-percent rise to $52.63 a barrel, while Brent blend was up 0.44 percent and trading at $61.78 per barrel as of 06:34 GMT. On the broader picture, the current OPEC+ deal to curb oil production, United States sanctions against Venezuelan and Iranian oil exports and the so-called "Saudi Put" keep offering strong contention in case of occasional drop in prices.

"We believe that oil is not pricing in supply-side risks lately as markets are now focused on U.S". Elsewhere, given the concerns surrounding rising USA crude production, focus will be on tonight's API crude oil inventory report.

These customers have fallen away after Washington imposed sanctions earlier this year.

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"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", USA bank Goldman Sachs said in a note on Wednesday.

Venezuela has tried to find alternative customers, especially in Asia, but under US pressure many buyers there are also shying away from dealing with PDVSA.

"Oil production is rapidly falling and companies that normally resell Venezuelan crude have not found ways to mitigate the effect of the USA sanctions", Barclays bank said.

The moderate growth is reportedly tied to the voluntary output cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and its non-OPEC allies. "China trade talks, ignoring the risks now in place from the loss of Venezuelan barrels", US bank J.P. Morgan said in a weekly note. The WTI futures contract is down more than the Brent futures contract because of rising USA supply and the possibility that the US will not extend exemptions against the Iranian sanctions.

Global oil cartel Opec said Tuesday it sharply reduced crude oil production last month, after heavyweight Saudia Arabia slashed output and exports fell in crisis-hit Venezuela. But weak economic data out of China - the world's second-largest economy - has continued to stoke expectations that demand is on the decline.

OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from January 1 to prevent excess supply building up.

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