OPEC Chief Sees Oil Producers Closer to Re-Balancing Market

Danny Woods
April 21, 2017

The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, together with other producers like Russian Federation have agreed to cut output by nearly 1.8 million barrels per day (bpd) during the first half of the year to rein in a global fuel supply overhang and prop up prices.

U.S. crude stocks fell 1 million barrels in the latest week, according to the U.S. Energy Information Administration, a bit less than anticipated.

Global benchmark Brent crude futures were down 34 cents at $55,02 a barrel at 1330 GMT.

OPEC leader Saudi Arabia tightened February crude oil exports to the lowest since mid-2015, official data showed on Tuesday.

The gasoline inventory rose by 1.4 million barrels as refinery runs increased by 334,000bpd in the US.

U.S. West Texas Intermediate (WTI) crude futures were also down 9 cents at $52.56 a barrel.

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OPEC has had a hard time reducing a global crude glut, as supply remains high in parts of the world, particularly the United States, where inventories were at 532.3 million barrels, only about 3 million less than the record reached in March.

The continued growth in US production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook. US WTI crude futures rose 1 cent to $52.66 a barrel.

Patrick Pouyanne, chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year, citing USA shale production.

More barrels could be on their way to market from USA shale fields as financial companies are investing billions in production, a Reuters analysis shows. As OPEC & co. cut, they cede market share to their American rivals, and as oil prices rise, those US shale producers are predictably taking advantage and upping their own output. John Saucer, vice president of research and analytics at Mobius Risk Group in Houston, said the market was not jittery, noting low volatility and weak oil prices, which he said doesn't "really signal a market that's too concerned about geopolitical hotspots".

Saudi Arabia has undertaken the largest cut in oil output (486,000 barrels per day) among the participants of the OPEC deal signed past year in Vienna.

The anonymous sources said that Saudi Arabia, Iraq, and Kuwait would support an extension of the cartel's existing 1.2-million-barrel per day production cut during the summit in Vienna next month.

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