Oil Pares Gains as Stockpiles Rise

Opec oil production falls as Saudi Arabia slashes output

Additionally, gains are being limited by weakening global demand.

Brent for April settlement advanced 53 cents to $62.95/bbl on the London-based ICE Futures Europe exchange, after adding 1.5% on Tuesday.

Oil climbed for a second day after Saudi Arabia pledged to deepen production cuts and U.S. President Donald Trump said he might extend a deadline for additional tariffs on China. On Tuesday, the Saudis said it had cut its output by nearly 800,000 bpd in January to 30.81 million bpd.

The United States' Energy Information Administration said on Tuesday that they intended for the country's crude production to hit a new record in 2020 - around 13.2 million barrels per day. That said, Crude's price remains considerably lower than its altitude in October when it traded north of $75.00.

Also on the radar are hopes expressed by the USA and Chinese officials that a new round of talks, which began in Beijing on Monday, would bring them closer to easing their months-long trade war.

None the less, Venezuela is a founding member of OPEC, a 28-member organization & the largest pact of oil producing nations in the world.

More news: Backed forces move to capture final Islamic State territory in Syria

The new round of sanctions targeting Iran's oil sector were put in action on November 4, 2018. "This is because, in terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations", the group added.

The oil price has risen by 20 percent so far this year, yet most of that increase materialized in early January, before the imposition of USA sanctions on Venezuela's energy sector.

The American Petroleum Institute (API) reported a smaller-than-expected draw of 998,000 barrels during the week-ending February 8. Analysts polled by Reuters forecast an increase of 2.7 million barrels. Analysts were looking for a build of 508,000 barrels for the week. Even 1.5 million barrels puts Iran's economy in a bind and anything less than that will make the budget hard to manage.

Crude oil may slide in the coming months as energy agencies continue to forecast a crude market swamped with supply at a time when demand has wavered. But a shortfall of heavy-sour crude can cause complications for many refiners, such as those along the U.S. Gulf Coast, configured to process it.

At the same time, more and more traders are counting on a trade agreement between China and the USA, which would immediately mean more demand.

Estimates for how much crude is needed from OPEC were lowered by 300,000 barrels a day from last month's assessment amid surging supplies from its rivals, driven by the US shale boom. In the meantime, the markets seem well supported with buyers just waiting for any signs of increased demand.

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