“The recent stance of Saudi Arabia and Russian Federation on supporting an extension of the production cut deal by another nine months is favoring oil prices”, said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. But by May 17, July contracts for Brent crude were trading at $51.55.
USA crude inventories rose by 882,000 barrels in the week ending May 12 to 523-million barrels, according to the American Petroleum Institute (API), defying expectations of a drop.
WTI light sweet crude oil was up 66 cents at USD50 a barrel, the highest since April. In an interview with Reuters, the national oil company chairman said the company has returned to parts of the Sirte basin for the first time in more than two years.
Unlike many other oil producing nations, the U.S. does not have the ability to simply dial up or down the country’s oil production, meaning the structure of the market is competitive, allowing the USA to capitalize on any OPEC-induced price gains to raise production even more.
On Monday, Saudi Arabia and Russian Federation pledged to continue cutting supplies to prop up prices and stabilize the market.
U.S. crude stocks fell by 5.2 mb w/w, the largest decline since the year-end dip in stocks. Since bottoming out in September, however, USA crude oil production has increased by almost 465,000 b/d. That could slow the supply drawdown. USA output “increased again in February by almost 200,000 b/d, and at 9.03 million b/d was the highest since March a year ago”. USA energy companies added oil rigs for a 18th consecutive week this week, Baker Hughes showed.
On May 25, leaders from OPEC and other producers will meet in Vienna to decide on output policy. Off-topic, inappropriate or insulting comments will be removed.