Oil market 'almost balanced' despite rising US supply: IEA

Gladys Abbott
May 17, 2017

Futures pared gains in NY after climbing 2.1% on Monday.

Putin, speaking in Beijing, said extending the output cuts was the right thing to do.

The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut output by 1.8 million barrels per day in the first half of 2017, with a possible six-month extension, in a bid to shore up prices.

"To underscore the determination of oil producers to ensure market stability, predictability and sustainable development - the joint actions of the participating producers should be extended by 9 months, through March 31, 2018", the countries said in a joint statement published Monday by Russia's energy ministry. "It's taking longer than expected".

The S&P rose 11 points to end trading at 2,402 and the Nasdaq added 28 points to 6,149 - both reaching their all-time closing highs. Total volume traded was about 58 percent below the 100-day average.

Brent for July settlement gained 15 cents to $51.97 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.65 premium to July WTI.

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USA bank Goldman Sachs said the deal "will likely further extend the oil price rebound... although the rally so far... has remained modest compared to the move that occurred a year ago when the OPEC cuts were first announced".

Official data from the Energy Information Administration will be released Wednesday, amid forecasts for an oil-stock drop of around 2.2 million barrels.

In the first quarter, the IEA said, "we might not have seen a resounding return to deficits but this report confirms our recent message that the re-balancing is essentially here and, in the short term at least, is accelerating". Still, even if OPEC and its partners prolong their measures when they meet next week, inventories will probably remain above average through the end of the year, it said.

Yesterday's news that Saudi Arabia and Russian Federation will argue in favor of extending the current production cuts through the first quarter of 2018 indicate that drawing stockpiles down to the five-year average has proved to be more hard than OPEC and its partners anticipated.

Crude futures were building on their overnight gains Tuesday morning in Asia, amid expectations that USA data this week will show draws in crude and refined product inventories for the week ended May 12.

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