OPEC Sees Much Higher Oil Supply From Rivals In 2017

  • OPEC Sees Much Higher Oil Supply From Rivals In 2017

OPEC Sees Much Higher Oil Supply From Rivals In 2017

Oil futures rose in Asian trading on Wednesday after Reuters reported that Saudi Arabia would cut supplies to the region as OPEC battles against rising USA production that is threatening to derail its attempts to end a sustained global glut in crude.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.66 per barrel, up 23 cents, or 0.5 percent from the day before.

Brent crude surged 2.4 per cent to around US$50.12 per barrel yesterday afternoon, recovering some of the past week's losses prompted by concerns that no decision had been made on whether Russian Federation would agree to extend oil cuts, meant to buoy prices.

Saudi Arabia, the world's biggest oil exporter, has notified several Asian refiners of its first cuts in crude allocations for regional buyers since Opec's output reduction took effect in January.

Analysts believe that Wednesday's price rebound will be short lived, given the Energy Information. And while dubbing India the "bright spot" for global fuel-consumption growth, BMI Research projects India's fuel demand will rise 7.8% this year.

Brent LCOc1 was 30 cents higher at $50.52 a barrel by 0715 GMT.

"It is hard to see how the day's gains last".

The oil market is sending signals that it wants OPEC to not only extend production limits when it meets this month, but cut deeper. But oil slumped in recent weeks as rising US production undermined the OPEC-led efforts to reduce a global crude glut. "With demand continuing to surprise to the upside", the global supply deficit may be as wide as 2 million barrels a day by July, he said.

Oil prices remained under pressure during Tuesday's United States session with a slide in WTI to lows near $45.60 before a recovery towards the $46.00 p/b area.

USA supplies of crude are still near records and more than 100 MMbbl higher than the five-year average for this time of the year, data compiled from the EIA show.

"The selloff was overdone and was mainly sentiment driven as people were getting impatient with OPEC", said James McCullagh, an oil products analyst at Energy Aspects.

In the report, OPEC pointed to continued high compliance by its members with the supply cut deal and said oil stocks in industrialized nations fell in March-although they are still 276 million bbl above the five-year average.

Stubbornly high crude inventories, a measure that's been closely watched by OPEC and other market participants, had the biggest drop of the year, declining 5.25 million barrels.

"As long as you've got those builds in gasoline, it is going to be hard for crude oil to rally", said Olivier Jakob, energy market strategist at Petromatrix in Zug, Switzerland.