Oil prices rise on prospect that Saudi Arabia seeking output cut extension

Apr 22, 2017, 01:48

On the flipside however, OPEC, via its monthly oil market report released on Wednesday evening, said Nigeria was still producing at an average 1.545 million barrels per day, according to secondary sources.

Now, its exports have exhausted its floating oil storage reserve, meaning to sustain its five million barrels a day of exports, it will have to rely exclusively on domestic output, which is substantially below its export target.

U.S. West Texas Intermediate (WTI) crude futures were up 26 cents at $53.66 a barrel, on track for a seventh straight session of gains.

According to OPEC, crude oil supply from non-members this year will average 57.89 million bpd, thanks to growing output in the USA and modest declines in Columbia and China.

Oil prices have reversed their losses in March, with Brent crude oil hitting a month-high of $56.65 a barrel on Monday.

OPEC cut oil output in March by more than pledged under a supply reduction deal and said oil inventories had fallen in February, suggesting that its effort to clear a supply glut that has weighed on world oil prices is succeeding.

Opec and other producers, including Russian Federation, have pledged to cut output by about 1.8-million barrels per day during the first half of 2017 to rein in oversupply.

"The forecast for non-OPEC supply in 2017 will also depend on how much USA tight oil production improves in the coming months", OPEC said in its April Bulletin.

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"For 2017, oil demand growth is anticipated to be around 1.27 mln barrels per day, following an upward revision of 10 million barrels per day", the organization said.

EIA estimates that the price of West Texas Intermediate (WTI) oil was $52.25 per barrel on April. 7, $1.71 over last week's price and $12.51 above a year ago.

In last month's OPEC report Saudi Arabia had posted numbers showing it raised output above 10m bpd in a move that briefly unnerved markets, before the kingdom issued a rare statement to explain the output increase was aimed at replenishing domestic inventories, rather than an attempt to increase exports.

In 2016, the United States was the world's largest net exporter of refined products, with a significant portion of crude oil input to US refiners supporting those exports.

Analysts and traders said long-term fundamentals remained strong and more stockpile draw-downs are likely as refiners exit maintenance season.

With demand expected to rise by 340,000 barrels per day in 2018, that would leave increasing amounts of United States oil for export or storage. Prices are still up from about $42 a barrel a year ago, and OPEC was upbeat on the outlook for the market.

"We saw a bit of a reversal in oil prices (on Wednesday) and it came despite some positive news", chief market strategist at Sydney's CMC Markets.

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