Morning Market Overview
New York Mercantile Exchange nearest delivered oil futures and Brent on the Intercontinental Exchange edged higher in overnight trade, underpinned by declining production from Organization of the Petroleum Exporting Countries, while gains were capped by another build in U.S. crude oil inventories reported by American Petroleum Institute. OPEC said Wednesday crude oil production for its 14 members fell 534,000 bpd to the lowest level in more than four years at 30.022 million bpd, according to their Monthly Oil Market Report.
It was the sixth consecutive month in which OPEC output has declined, driven by steep declines in Saudi Arabia with production by the kingdom down 324,000 bpd last month to below 10 million bpd at 9.794 million bpd, also the lowest level since February 2015. The second largest decline came from Venezuela, as its production plunged 289,000 bpd to a multi-decade low at 732,000 bpd, citing secondary sources.
In Iraq, production rate dropped 126,000 bpd to 4.522 bpd last month, moving the country into compliance with their quota under OPEC+ accord. As a result of high compliance among OPEC and non-OPEC countries subject to a production cut agreement, Energy Information Administration sees an increasingly tightening oil market in the coming months.
In their Short-term Energy Outlook released on Tuesday, EIA estimated global crude inventories declined by 700,000 bpd in March and 500,000 bpd for the first quarter, which is the first quarterly stock draw since fourth-quarter 2017. EIA data showed U.S. petroleum inventories declined by more than 10 million bbl a week three times in the first quarter, making it one of the largest global inventory withdrawals.
Against bullish supply figures, API reported U.S. crude stocks gained 4.1 million bbl last week to 455.8 million bbl, missing expectations for a 2.5 million bbl build. API data also showed larger-than-expected draws in gasoline and distillate inventories in the first week of April.