Published: Sat, May 20, 2017
Economy | By Annette Adams

Oil rebounds, as OPEC talks up cutting supply into 2018


Despite an overall drop in OPEC crude production in April, Saudi Arabia's output increased, according to a monthly report from the cartel out Thursday.

State-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of OPEC's agreement to reduce production and as it trims exports to meet rising domestic demand for power during the summer.

USA crude production has risen by over 10 percent since mid-2016 to 9.3 million bpd, close to the output of top producers Russian Federation and Saudi Arabia.

Saudi's Oil Minister Khalid al-Falih said he's "rather confident" OPEC will extend its production cuts into the second half of the year and "possibly beyond".

News of a possible extension of the OPEC cuts and reports that USA crude stockpiles have dropped by 5.2 million barrels last week slightly boosted worldwide oil prices.

US West Texas Intermediate (WTI) crude oil futures were trading at $46.40 per barrel, down from an intra-day high of $46.66 and also little changed from their last settlement.

Because of a lag between the deployment of drilling rigs and realized oil production, recent rig increases indicate that US oil production will likely rise further in the coming months.

"Conservative estimates predict that we will need to offset 20 million barrels per day in combined demand growth and natural decline over the next five years", Falih said.

A statement by Saudi energy minister on extension of oil cut agreement will be good news Nigeria, PREMIUM TIMES can report. USA crude output has grown by over 10% since mid-2016 but didn't let oil prices to surge.

USA energy companies last week extended a recovery in oil drilling into a 12th month, energy services firm Baker Hughes Inc said on Friday.

Brent was 60 cents higher at $50.82 a barrel by 1255 GMT after hitting an early high of $51.09.

The Opec deal reached in November helped lift prices but also breathed new life into U.S. producers, who have boosted drilling in shale regions and raised United States output to levels not seen since mid-2015.

Russian Federation said yesterday it was discussing prolonging cuts with other producers beyond 2017, without giving a clear timeline.

"The market is getting exhausted of hearing from OPEC how good they are, how compliant (with supply curbs) they are", said Eugen Weinberg, head of commodity research at Commerzbank.

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