Oil rose to around US$67 a barrel on Tuesday, supported by Saudi Arabia’s plan for further voluntary supply curbs in April and by a cut in oil exports from Venezuela due to a power outage.
Saudi Arabia, seeking to drain a supply glut and support prices, plans in April to keep its oil output well below the level required of it as part of an OPEC-led supply cutting deal, a Saudi official said on Monday.
Brent crude, the global benchmark, rose by 70 cents to US$67.28 a barrel. U.S. West Texas Intermediate crude added 57 cents to $57.36.
“This shows Saudi Arabia’s resolve to keep the oil market balanced by keeping oil supply tight. Additional buoyancy has come from news that the massive power outage in Venezuela is also hampering the country’s oil exports”, said Carsten Fritsch, analyst at Commerzbank.
Crude has rallied this year after the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, returned to supply cuts as of Jan. 1.
Saudi Arabia has voluntarily cut its supply by more than the deal requires and in April will keep output “well below” 10 million bpd, the Saudi official said – below the 10.311 million bpd that the kingdom had agreed to pump.
“We see a tightening underlying physical crude balance as a key pillar of support for outright prices at this point in the year,” said analysts at JBC Energy in a report.
A host of involuntary supply curbs in OPEC members caused by unrest in Libya, and U.S. sanctions on Iran and Venezuela, have also helped to boost prices.
Venezuela’s state-run oil firm PDVSA has been unable to resume crude exports from its primary port since a power outage last week, people familiar with the matter said on Monday.
Offsetting these developments is the surge in U.S. supply, which the International Energy Agency said on Monday would continue to 2024, probably requiring OPEC and its allies to keep up their policy of market management.
In the near term, the latest reports on U.S. inventories are expected to show a rise in crude stocks. Six analysts polled by Reuters estimate they rose 2.9 million barrels.