Even if OPEC+ has a highly probable rollover of 1.2 million barrels per day (bpd) output cuts for the second half of 2019, as agreed at the G20 Summit by Saudi Arabia and Russia, the next six months will still be challenging.
Oil continued its rally, driven by involuntary supply losses from Venezuela, Iran and Libya. The market has steadily tightened for the second month in a row and it seems that Brent has settled around the $70 per barrel mark.
Asian Pacific refiners had halted purchases of Iranian crude oil amid US sanctions, despite the existence of waivers, and did not resume imports until recently, when Japan and South Korea received their first cargoes in months.
This winter, the liquefied natural gas (LNG) market experienced a different focus as US gas exports were challenged by weaker Asia demand. That kept the global LNG market under pressure and led to weaker prices than previous winters.
Since early December, oil prices have been moving in a narrow band with Brent crude hovering between $60 and $62 per barrel. Lower price forecasts continue from financial advisers and international organizations.
Oil prices were last week hovering around the psychological level of $60 per barrel of Brent crude, dropping to under $59, and at best, rising a little over $61. The massive rally in US stocks didn’t lift prices.
Iran has asserted that no OPEC member can take over its share of oil exports. This has created a quandary, as only OPEC producers in the Arabian Gulf have crude available with a sulfur level above 0.5 percent, matching Iran’s sour crude.
Oil prices haven’t changed much over the past week. Brent Crude fell slightly below $80 per barrel for the first time in a month and settled at $79.78 per barrel by the week-ending close on Friday. WTI also fell slightly below $70 per barrel for the first time since mid-September and settled at $69.12 per barrel by the end of the week.