Oil Output Cuts between Saudi Wish and Russian Hopes

Brittany BishopApr 22, 2017

Industry data was said to show US crude supplies fell last week and OPEC's monthly report said worldwide inventories dropped in February. U.S. West Texas Intermediate crude futures settled up 7 cents at $53.18 a barrel.

In its monthly market report, OPEC said the group's production - based on secondary sources used to assess members' output - dropped 152,700 barrels per day to 31.9m bpd last month, led by declines in Libya, Nigeria, UAE and Iran.

Oil prices have made gains due to reports that one of the largest oil exporting members in OPEC, Saudi Arabia, has been lobbying for an extension of the production-cut deal beyond June.

Worldwide benchmark Brent crude futures were up 33 cents by 0900 GMT at $56.56 a barrel, their highest since early March.

OPEC and other producers, including Russian Federation, agreed late in November to cut output by around 1.8 million barrels per day in the first half of 2017 to rein in oversupply. Saudi Arabia, the group's de facto leader, provided numbers directly to OPEC, saying it cut output by 111,0000 barrels a day last month to 9.9 million bpd.

Bloomberg reported Saudi Arabia is likely to support extending Opec output cuts into the second half of 2017 in an effort to boost oil prices, according to a person familiar with the kingdom's internal discussions. But it has kept supplies to Asia steady so far this year as it defends its market share in the world's fastest oil-demand growth region against other producers.

Global oil prices eased modestly in late morning trading in Europe as data pointing to increased crude supply appeared to offset speculation of an extension of OPEC's agreed production cuts.

The agency said oil stocks across the Organization for Economic Cooperation and Development (OECD) fell by 17.2 million barrels in March. "It does appear that there is bit of focus on the data that came alongside inventory numbers which showed further increase in United States production".

Both benchmarks kicked off Thursday on a downbeat note after US data on Wednesday showed domestic production jumped to its highest level in more than a year last week. Total non-OPEC supply was forecast at 580,000 bpd, OPEC said.

Saudi Arabia has cut more than it pledged, which has helped compensate for less stringent compliance by other signatories to the deal.

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