Crude Oil Analysis: Oil Prices Pullback from 2019 Highs on Trade War Update

Brent crude oil had edged towards fresh 2019 highs throughout the European morning with prices above $68/bbl. Yesterday’s DoE crude oil report showed a larger drawdown (3.8mln) than the API figures had signaled, while crude production in the US dropped by 100k barrels. Elsewhere, among the main supportive factors over the past 24hours had been on reports that the US are seeking to reduce Iranian oil exports to below 1mbdp from the current 1.25mbpd. Consequently, with nations such as India still look to import Iranian oil, it is possible that demand may drop ahead of the US waiver expiration in May.

Alongside this, with the struggles continuing for Venezuela with regard to limited oil production amid the US sanctions, Venezuela was dealt another blow after Indian oil companies announced that they would stop the sale of diluents (key for Venezuela to transport oil) to PDVSA until US sanctions had been lifted. Of note, latest OPEC monthly report stated that Venezuelan output dropped 142kbpd in February, according to secondary sources.