OPEC Cuts Oil Production by 800,000 Barrels a Day in January

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Further, the Energy Information Administration (EIA) said that Venezuelan output slipped to 1.22 million barrels per day.

In that letter to OPEC on January 29th, a day before United States inclined sanctions on Venezuelan state-owned oil firm PDVSA, Maduro wrote, "Our country hopes to receive the solidarity and full support of the member countries of OPEC and its ministerial Conference, in the fight we are now having against the illegal and arbitrary intrusion of the United States in the internal affairs of Venezuela".

On the supply side, Saudi Arabia, the defector leader of OPEC, said it was cutting daily production and exports by a further 500,000 barrels per day (bpd) on top of its agreed OPEC quota reduction. Despite the already considerable increase in crude production outside of OPEC, the IEA again raised its forecasts for supply from non-OPEC members in the month ahead.

The EIA also expected that West Texas Intermediate crude oil prices will average 8 dollars per barrel lower than Brent prices in the first quarter of 2019 before the difference gradually falls to 4 dollars per barrel in the fourth quarter of this year and through 2020.

Analysts said markets are tightening amid voluntary production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and because of USA sanctions on Venezuela and Iran.

The Organization of the Petroleum Exporting Countries said on Tuesday it had cut output by nearly 800,000 bpd in January to 30.81 million bpd.

Oil prices rose on Wednesday as producer club OPEC said it had cut supply deeply in January and as USA sanctions hit Venezuela's oil exports.

Elsewhere, the head of Russian oil giant Rosneft, Igor Sechin, has written to the Russian President Vladimir Putin saying Moscow's deal with the Organization of the Petroleum Exporting Countries (OPEC) to withhold output is a strategic threat and plays into the hands of the United States.

Currently, Iran exports a little more than 1 mb/d of crude oil, less than a half of what it sold last May and the rest of its production is used domestically.

"In terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations (from Venezuela sanctions)", the Paris-based IEA said.

The move has created disruption for some refiners, but has not led to a dramatic increase in the oil price in 2019. "China trade tensions and geopolitical uncertainty".

Mars, a medium crude grade from the U.S. Gulf, has moved to a rare premium over Louisiana Light Sweet.

Helping to keep a lid on the market are adequate global inventories, the prospect of weakened demand tied both to U.S. In the meantime, the markets seem well supported with buyers just waiting for any signs of increased demand.

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