WTI, Brent Futures at New Highs

WTI, Brent Futures at New Highs

WASHINGTON, D.C (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent futures moved higher in early trade Tuesday, as Organization of the Petroleum Exporting Countries slashed output to a four-year low in March, speeding the decline in available global supply.

In midmorning trading, West Texas Intermediate May contract was trading near a five-month high on the spot continuation chart at $62.33 barrel (bbl), up about $0.70, while ICE Brent June futures moved $0.20 up to $69.21, having traded at a $69.50 nearly five-month spot high overnight. Nymex ULSD May contract gained 1.65 cents to $2.0047 gallon, while RBOB May futures rallied 1.33 cents to $1.9122 gallon.

The new 2019 highs by WTI and Brent come as OPEC crude oil production reached a four-year low in March, down 280,000 barrels per day (bpd) to 30.40 million bpd, according to a Reuters' survey. The survey shows the biggest drop came from Saudi Arabia, which pumped 9.82 million bpd in the profiled month, a steep 220,000 bpd less than in February. Saudi Arabia extended deeper-than-pledged cuts in March, while removing more than 400,000 bpd of oil from the market since January when the OPEC agreement took effect.

The second-biggest drop occurred in Venezuela, where production declined by 150,000 bpd to 890,000 bpd in March, driven down by U.S. sanctions on its oil industry and severe power outages that caused large-scale disruptions in exports and oilfield operations. The survey shows Venezuela's output reached the lowest level in almost 16 years last month, even as the country is exempt from the OPEC agreement.

Saudi Arabia's larger-than-expected production cuts and involuntary losses in Venezuela offset lagging compliance from Nigeria and gains in Libya, where the country's biggest oilfield, El Sharara, restarted operations in March.

According to Reuters data, Nigeria boosted exports and ramped out production at the new offshore oilfield in Egina, increasing output by 90,000 bpd to a three-year high of 1.92 million bpd.

Against this backdrop, OPEC members reached a cumulative 135% compliance with the pledged cuts, up from 101% in February, mainly driven by Saudi Arabia over-compliance with the terms of OPEC agreement.

Liubov Georges can be reached at liubov.georges@dtn.com