While the oil market continues to focus on supply/demand fundamentals, these are some key updates that you need to keep a tab on,
- US oil production and rig count: The production in the United States continue to edge higher. This month it reached a new record high of 12.2 million barrels per day. The production rigs have also been rising. The number of operating oil rigs in the United States stands at 833, much higher than the 2016 low of 316.
- Venezuela crisis: Crisis in Venezuela is now close to boiling point as the United States is doing everything possible other than a direct intervention to topple Nicolas Maduro’s government and replace with him with Juan Guaido, a self-declared president of the United States. According to OPEC, Venezuela’s production declined to just 0.73 million barrels per day, down from more than 2 million barrels just a few years ago.
- Iran: Trump administration has cleared that with Prime Minister Benjamin Netanyahu’s victory in the Israeli election, the administration would stress on its focus to get a peace agreement in the Middle East between Israelis and Palestinians and counter Iran’s influence in the region more actively. The United States’ pulling out of the nuclear agreement and re-imposing sanctions have already taken a toll on Iran’s oil production and exports, however, the impact has not been dramatic. According to OPEC, in March, Iran produced 2.7 million barrels per day, much higher than it was produced during the 2011-12 sanctions when Europeans had joined in the Americans to choke Iran’s oil exports. With an increased focus on the Middle East, Iran’s oil would be a key focus for the remaining years of the Trump Presidency.
- OPEC: OPEC’s production declined for the fifth consecutive month in March and OPEC’s compliance with the newly reached agreement has reached 130 percent. In March, OPEC’s production declined by 0.534 million barrels per day to 30.02 million barrels per day.
- Libya violence: Fighting has intensified in Libya’s capital Tripoli as Libyan National Army (LNA) led by general Khalifa Haftar launched an assault last week to retake the capital from UN-backed Government of National Accord (GNA). While Libya’s violence has gone up, the impact on oil is likely to be minimal as LNA already controls the majority of the oil fields in Libya.
- Trump’s tweets: No American President had influenced oil price with such little effort than President Trump. Every time the price moves higher by much, the President tweets against higher price or OPEC and price drops. With Brent crude hovering above $72 per barrel, the tweets may come anytime now.
Key global oil benchmarks:
WTI - $63.2/barrel
Brent - $70.9/barrel
OPEC basket - $70.4/barrel
Urals - $70.8/barrel
Oman - $69.5/barrel
Dubai - $69/barrel
Western Canada Select - $45.7/barrel