Iraqi Oil Production Exceeded 4.5 Million Barrel Per Day in February

A poll of market analysts showed on Friday that OPEC will have to extend its oil output curbs beyond June as a revival in crude production outside the group, specifically in the US, may scupper its efforts to erode an overhang of unused inventory.

May West Texas Intermediate crude oil closed the week at $49.31, up $0.28 or +0.57%.

"Neither a weaker dollar nor Saudi talk of doing "whatever it takes" to bring inventories down to healthier levels is inspiring much buying", said Timothy Evans, analyst at Citi Futures in NY, in a note Friday, reports Reuters.

On London's Intercontinental Exchange global benchmark Brent for May delivery rose 0.04% to $51.76 a barrel. Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, dropping after nine consecutive increases.

He also recalled that by the end of April Russia plans to cut oil production reduction 300,000 barrels per day and maintain this level until the end of the first half of the year.

The weekly EIA report showed inventories fell by 237,000 barrels in the week to March 10, compared with analysts' expectations for an increase of 3.7 million barrels.

Brent and WTI were supported this week by USA inventory data that showed a surprise drop in stocks and assurances that a deal to trim nearly 1.8 million barrels per day (bpd) from global markets in the first six months of the year was still on track, with the possibility of an extension still dangling.

"The soothing comments from Saudi Arabia and the first, small drop in USA oil inventories this year helped stop crude oil's aggressive price correction", said Ole Hansen, head of commodity strategy at Saxo Bank.

Oil prices slipped on Monday despite news that OPEC was supportive of extending a six-month deal to cut output as investors continue to grapple with worries about growing USA oil output and high inventories.

The market may continue to find resistance at former support levels. And the potential for increased US production continues to build with Baker Hughes reporting a 14 drilling rig increase last week.

Last week's comments from Saudi Arabia's Energy and Industry Minister Khalid Al Falih on the extension of the six-month output cut may continue to sooth frayed nerves, especially among traders who are still reeling from falling oil prices, but analysts say positive sentiment still remains fragile. However, if OPEC and other non-OPEC members decide to announce formal talks over extending the program then I think oil could rise $5.00 to $7.00 over a short period of time.

  • Julie Sanders