Reuters: Oil hits 2019 highs amid OPEC cuts, partial Saudi field outage

09:00, 15 February 2019
Economy
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REUTERS

Brent rose as far as $65.10, pushing past the $65 mark for the first time this year, before falling back to $64.77 by 0623 GMT. That was still 0.3 percent above the last close, Reuters said.

The international benchmark for oil prices is at a near 3-month high and set for a 4.5-percent gain for the week.

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U.S. West Texas Intermediate (WTI) crude futures were at $54.56 per barrel, up 15 cents, or 0.3 percent, from their last settlement.

Traders said prices were pushed up by the partial closure of Saudi Arabia's Safaniyah, its biggest offshore oil field with a production capacity of more than 1 million barrels per day (bpd).

The shutdown occurred earlier this week, a source said, and it was not immediately clear when the field would return to full capacity.

The partial closure comes on top of voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia the de-facto leader, aimed at tightening the market.

The group as well as some non-OPEC producers including Russia late last year agreed to cut crude output by a joint 1.2 million bpd. Top exporter Saudi Arabia said it would cut even more in March than the deal called for.

Russia has reduced its oil production by 80,000-90,000 bpd from its level in October, Moscow's reference level for its cuts, the country's energy minister said.

"Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply," Bank of America Merrill Lynch said in a note.

It also expects "a 2.5 million barrels per day drop in OPEC supply from 4Q18 into 4Q19."

Despite Friday's bullish market, there are signs of a slowdown in demand.

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