The oil market has seen substantial price strengthening lately. Oil quotes have gained almost 4% per bbl since last Friday. With this rise, the prices are coming closer to the upper end of the consolidation space.
According to the market, the upturn was related to the media reports that Saudi Arabia will ship less oil than clients' ordered in April, with the output in the Kingdom to be well below 10 million bbl per day. Saudi Arabia's Minister of Energy Khalid A. Al-Falih stated that the cartel is unlikely to revise the agreement at the upcoming meeting slated for April. However, the preparations for the meeting are said to remain the key support for oil prices this month.
Besides, active discussion of the possible consequences of the power cutoff in Venezuela has become another driver of the concerns in the oil market recently. The power outage followed by attempts of emergency resumption of power feeding entailed massive accidents and explosions at the power plants. This situation means that it will take a long time to restore power supply in full. With the power grid failure, Venezuela faced numerous breakdowns at different parts of its oil refining industry. Moreover, some sources reported that few plants suspended oil production. This accident made Venezuela reduce oil output to some 0.5 million bbl per day (1.1 million bbl per day in January), as the experts forecast. Still, there are reports that laden oil tankers remain in Venezuela's Port of Jose. Meanwhile, the US Energy Minister stated during the interview that Washington is ready to assist Venezuela with the restoration of hydrocarbon production, but only when power shifts happen. Thus, Venezuela seems to hog the blanket in the oil market.
Along with the Venezuela issue and OPEC meeting, we should not leave aside a number of other factors that may affect prices this week. In particular, the question is oil reserves and production data in the USA as well as results of drilling activity. Moreover, the market is waiting for the results of the meeting of oil industry leaders to take place in Houston this week. The event will be dedicated to the potential of shale oil production development along with other urgent topics.
The Houston conference will help to understand the mood and opinions of many "big fishes" in the oil market. For example, one of the most notable statements made this week was outlook by the International Energy Agency regarding the US joining oil exporters. According to the outlook, the USA may remain the global leading oil producer and then will also be among the major exporters.
Despite strong reasons for both upward and downward movements, oil prices maintain positions near $66/bbl in terms of Brent oil for about a month already.