Economy

Oil Price Forecast: Crude Could Crumble if Growth Concerns Catch Fire Again

Oil Price Forecast: Crude Could Crumble if Growth Concerns Catch Fire Again

WTI (oil futures on NYMEX) finally cracked the key resistance-turned-support at 64.00, as the sellers remain in command so far this Thursday, as the sentiment remains weighed down by mounting concerns over the economic slowdown and surging USA crude supplies.

The research and analysis arm of the Organisation of Petroleum Exporting Countries pointed towards a much tighter market in 2019 as the group has seen its production fall significantly this year, led by curbs to Saudi Arabian output along with dramatic, involuntary declines from sanctions-hit Venezuela. Two days ago, OPEC reported Venezuela's March output sank to 732,000 bpd, citing independent sources, while figures provided by the country put production at 960,000 bpd. OECD oil stocks fell by 21.7 mb on the month in February after three months of increases. Macroeconomic uncertainties can take their toll on oil demand, the IEA said.

Just last week, the U.S. Energy Information Administration estimated in its weekly supply-demand report that production had reached a new high of 12.2 million barrels per day.

"Russia has started talks about an oil production rise as it can hardly follow the OPEC+ deal", said another Russian energy source. The group pegged 2018 global oil demand growth at 1.41 million bpd.

Russian Federation is also ready to boost supplies.

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Nigerian production increased by 11,000 bpd in March to 1.733 million bpd and fell by 5.000 bpd to 1.685 million bpd according to direct communication, according to the monthly oil market report for April.

US sanctions and power outages pushed OPEC member Venezuela's crude output to a long-term low of 870,000 bpd, IEA says.

In December, OPEC and other major oil producers, including Russian Federation, pledged to cut production by 1.2 million barrels per day in order to prop up prices, effective from this January.

At the last OPEC meeting in Vienna, the group's members agreed to slash output by 812,000 bpd, with Russian Federation and nine other non-OPEC allies committing to a cut of 383,000 bpd for the first six months of 2019. "Iranian production was stable at 2.7 million barrels per day, (but) could take a further hit if the U.S. cuts import waivers in May", said Jefferies bank on Friday.