Oil prices declined on Thursday following the announcement of U.S. Energy Information Administration (EIA) on Wednesday that crude reserves surged, despite the emerging output cuts from the Organization of Petroleum Exporting Countries (OPEC) and other producers.
Foggy conditions along the U.S. Gulf Coast (USGC) that had restricted tanker arrivals have dissipated, which should have led imports higher last week, according to Michael Wittner, global head of oil research at Societe Generale.
Saudi Arabia is due to meet fellow OPEC members in June at their bi-annual meeting in Vienna to assess the market and the group's production policy.
We are moving fast to complete our cut by another 40,000 barrel per day to reach the level of 210,000 barrel per day that's the share of Iraq within Opec agreement. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.
"The agreement among OPEC and non-OPEC producers at the end of past year to cut 1.8mb/d [million barrels per day] of global output in 1H17 will have ramifications for United States oil producers", he says. For the week ending January 6, the EIA reported that net US crude production rose by 176,000 barrels per day, to 8.95 million barrels per day.
Saudi Arabia, now producing at a 22-month low, will consider renewing its pledge to reduce its oil output in six months, al-Falih said.
- Russian oil output broke post-Soviet records several times in 2016, EIA said, with liquid fuels production averaging 11.2 million b/d, up 200,000 b/d from 2015. Brent crude futures, the worldwide benchmark for oil prices, were trading at $55.14 per barrel at 0426 GMT, up 20 cents from their last close.
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Seven of the world's largest oil producing companies, including Exxon Mobil Corp. and Royal Dutch Shell, are eyeing an increase in oil output by 398,000 bpd this year, capitalizing on the higher crude prices and the newly-found profitability of oil extraction that stem from the OPEC oil cuts.
But skepticism remains. Since 1989, OPEC has hammered out numerous production cuts just like the one it negotiated previous year.
Brent crude futures climbed 52 cents at $54.16 per barrel, while the U.S. West Texas Intermediate crude futures rose 44 cents at $51.26 per barrel. The U.S. has its highest number of rigs in operation, at 529, in more than a year.
After falling nearly 6 percent earlier in the week, oil prices picked up steam Wednesday morning as traders saw a buying opportunity in the market.
Falih told a conference in Abu Dhabi that global demand for oil would grow by well over 1 million barrels per day (bpd) in 2017 and the market would tighten in two to three years.
The agency expects OECD inventories to rise to 3.13 billion barrels at the end of 2017 and to 3.16 billion barrels at the end of 2018. The average wholesale heating oil price is $1.77 per gallon, just over three cents per gallon less than last week but almost 68 cents per gallon higher than a year ago.