Opec oil production falls as Saudi Arabia slashes output

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Oil prices rose on Wednesday, after Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production.

Under the deal, which came into effect at the start of 2019, Saudi Arabia - largest OPEC producer - aims to produce 10.311 million bpd.

Oil prices gained almost two percent on Tuesday, supported by OPEC-led production cuts which Saudi Arabia said it would surpass by over half a million barrels per day (bpd) and by US sanctions against Iran and Venezuela. Saudi Arabia, are intending to push more barrels into the market to offset shortfalls.

Saudi's Energy Minister Khalid al-Falih announced the move in an interview with the Financial Times published Tuesday, as the kingdom seeks to drive up oil prices to help fund an economic transformation plan.

USA crude inventory has been hovering between 430 and 450 million barrels since early December - and remains around 6% above the five year average for this time of year.

US crude oil inventories rose last week to the highest since November 2017 as refiners cut runs to the lowest since October 2017, the Energy Information Administration said.

In its monthly report, Opec said it produced 797,000 fewer barrels per day in January than in the previous month, a decrease in line with the cartel's pledge to curb output in a bid to boost sagging prices.

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Rouhani also touched upon his country's support to some regional countries, saying its helps have aborted the enemies' plots. On Feb. 11, 1979 Iran's army declared its neutrality, paving the way for the fall of US -backed Shah Mohammad Reza Pahlavi.

With the monthly EIA report raising its USA production forecast and lowering demand for energy consumption, “we feel crude and the equity markets are due for a pause, ” risking a downside move for both, said Tariq Zahir, managing member at Tyche Capital Advisors.

The price of crude has risen 20 percent this year, driven primarily by the prospect of a decline in oil supply from OPEC and other top exporters such as Russian Federation.

OPEC and other countries will either have to continue curbing extraction to maintain prices in the future or accept an energy independent US and the likely oversupply of energy that would bring to the market.

The worldwide benchmark for oil prices rose as high as $65.10, pushing past $65 for the first time this year.

"Over the past two years, global oil demand has turned out to be higher than expected, supported by healthy economic activities, particularly in the OECD", said the report. Refining margins for gasoline have collapsed.

Venezuela has tried to find alternative customers, especially in Asia, but under USA pressure many buyers there are also shying away from dealing with PDVSA. In quality terms, it is more complicated.