Jueves, 18 Octubre, 2018

Oil rises as OPEC cuts outweigh United States drilling boom

Saudi Arabia is responsible for nearly 40% of OPEC cuts S. Arabia Russia Signal Oil Cuts Extension Into 2018
Manuel Armenta | 20 May, 2017, 03:11

Speaking in Kuala Lumpur earlier on Monday, Saudi Arabia's Energy Minister Khalid al Falih said he was "rather confident the agreement will be extended into the second half of the year and possibly beyond" after talks with other nations participating in the accord.

Saudi Arabia and Russian Federation, in response to the surge in U.S. shale production, have signalled they intend to continue to extend the deal reached to cut production by 1.8 million barrels per day in November.

The Organisation of the Petroleum Exporting Countries and non-Opec member countries will meet in Vienna on May 25 to discuss whether to continue output cuts of 1.8 million bpd in an effort to reduce a global crude glut and support prices.

Production fell in the UAE, Libya, Iraq and Iran, but rose in Saudi Arabia and Angola, with Saudi Arabia's output up almost 50,000 barrels a day.

After falling to their lowest levels since OPEC agreed to cut production back in November past year, Goldman Sachs have warned oil prices are nearing "capitulation".

Global benchmark, Brent crude was up 34 cents at $49.44 a barrel, having recovered from a session low of $48.65.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $47.46 per barrel, up 13 cents, or 0.3 percent from the last settlement.

"Russia is in solidarity with the efforts of our partners to rebalance the market and considers that the joint initiative to stabilise the world oil market is now effective", energy minister Alexander Novak said, Russian news agencies reported.

In its monthly oil market report (MOMR), OPEC said the United States oil and gas companies have already stepped up activities in 2017 as they start to increase their spending amid a recovery in oil prices.

He said he expected global oil demand to grow at a rate close to previous year.

Oil is now changing hands near $50 again and it seemed that OPEC is likely losing its grip to influence prices as a new wave of new supply is striking the market from Texas to Libya.

Non-cartel producers led by Russian Federation partially matched the cuts.

Nigeria, which along with Libya is exempt from OPEC cuts, is also expected to see a jump in output soon as Shell tests the Trans Forcados oil export pipeline before it restarts.

On May 10, 2017, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending May 5, 2017.