Indian Oil signs first annual deal for USA oil

Indian Oil signs first annual deal for USA oil

State-owned Indian Oil Corp (IOC) has signed its first annual deal to buy U.S. oil, paying about $1.5 billion for 60,000 barrels a day in the year to March 2020 Reuters reported yesterday quoting the company's chairman. On the broader picture, the ongoing OPEC+ agreement to curb oil production, U.S. sanctions against Venezuelan and Iranian oil exports and the so-called "Saudi Put" should keep a firm floor under crude prices for the time being. It had at that time bought about six million barrels of the US crude oil under a single tender for delivery between November 2018 and January 2019.

On Monday, Bank of America Merrill Lynch said in a note that considering the economic outlook and supply and demand balances, the bank said it expects Brent prices to average between $50 and $70 per barrel, "anchored around $60".

Indian Oil Corp, the country's top refiner, has signed its first annual deal to buy up to 3 million tonnes or 60,000 barrels per day of U.S. oil, its chairman Sanjiv Singh said on Monday. The Organisation of the Petroleum Exporting Countries (OPEC), as well as some non-affiliated producers like Russian Federation, agreed late previous year to cut output by 1.2 million barrels per day.

The April Brent crude oil futures contract was at $66.47 per barrel Monday, representing a 22-cent increase from Friday's settlement.

Traders said financial markets, including crude futures, were also generally supported by hopes that the United States and China would soon resolve their trade disputes, which have dragged on global economic growth. So far into 2019, oil prices have gained around 25 per cent.

India has been importing 620,000 barrels of Venezuelan crude oil a day since early February, up 66 percent from the previous month, the NDTV news channel reported. "We expect lots of volume going away from Venezuela, west Africa and Iran, so it makes sense to have guaranteed term supplies from the U.S., where crude production is increasing", she said.

Refiners around the world are also having to pay more to secure supplies of the medium, or heavy, sour crudes produced by Iran and Venezuela, both of which are under USA sanctions. Bigger-than-expected cuts from OPEC and its de facto leader and largest producer Saudi Arabia helped push prices up.

"The fact that oil production in the now rising significantly more sharply than previously expected is being completely ignored at present".

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