Oil prices build on gains on expectation of extended crude supply cut

An extension of the cuts at already agreed-upon volumes is needed to reach the goal of paring world inventories to their five-year average, Kuwait’s Oil Minister Issam Almarzooq said Tuesday in an emailed statement.

Saudi Arabia is the largest contributor among members of the Organization of Petroleum Exporting Countries to an agreement to balance an oversupplied market with managed production declines.

The EIA (U.S. Energy Information Administration) estimates that Iraq’s crude oil production fell by 5,000 bpd (barrels per day) to 4.4 MMbpd (million barrels per day) in April 2017-compared to March 2017.

Oil prices extended gains on Tuesday after top producers Saudi Arabia, Russia and Kuwait supported prolonging supply cuts until the end of March 2018 in an effort to drain a global glut.

Venezuela is undergoing a wave of unrest with protesters angry at an economy in crisis, with food and medicine shortages and soaring inflation.

The IEA concluded that the oil market was close to balance in the first quarter of the year, with average supply building by 100,000 bpd on a global level, and at 300,000 bpd for OECD members.

A report published Tuesday by the International Energy Agency found the global market for oil was “almost balanced”.

OPEC officials will meet next week in Vienna to talk about extending oil production cuts that have stabilized oil prices but haven’t rebalanced the global oil market yet.

“Any significant increase clearly offsets cutbacks by other OPEC and non-OPEC countries”, it said. But preliminary data from the IEA suggests oil stocks in the OECD will have risen by 16.2 million barrels in April, “which helps to explain the fall in oil prices seen in the second half of April”.

Oil rode its longest rising streak in more than a month as a proposal by the world’s two biggest crude producers to extend output curbs into 2018 boosted confidence that other nations will follow suit.

The IEA said U.S. operators have sharply stepped up spending and drilling activity since previous year against a backdrop of the coordinated supply cut agreement and higher prices. But non-OPEC output was still 310,000 b/d above year-earlier levels, with renewed growth in the United States adding to gains from Brazil, Canada, Kazakhstan and Russian Federation.

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