Oil eases off one-month peak

"Crude oil prices were firmer as oil investors shrugged off rising USA supplies and looked forward to the summer driving season", ANZ said in a note. The report also showed stockpiles at the U.S. crude hub at Cushing, Oklahoma, rose 276,000 barrels in the week.

The EIA revised its forecast for US oil production up by around 2 percent for 2018, and it increased its projection for the fourth quarter of 2017 up about 1 percent.

Brent contracts for the same month, the global benchmark, were seen 0.42% higher at $56.47 per barrel at 12:55 BST.

"Rising U.S. crude oil stocks have created some confusion so far this year, but they are a function of reduced U.S. refining activity on the one hand and U.S. crude oil imports on the other", SEB said.

The producer group agreed last November that it would reduce output by 1.2 million bpd, to 32.5 million bpd, for an initial six-month period starting in January to help reduce the world glut of oil that had built up over the past three years.

It also says an extension is needed "to avoid a credibility problem that is already emerging with lagging Russian output curtailment" and "failure to extend could push prices back down to the low $40s by year-end". US oil drillers boosted the rig count to 672 last week, the most since August 2015, Baker Hughes data show. Prices have dropped 1.6 per cent this year.

According to a report by Wall Street Journal, Saudi Arabia has informed other members of the oil organisation that it wants to extend a coordinated production cut beyond the first half of this year. "For the month of March, the ORB closed at its lowest value since November 2016 on rising crude oil production and crude oil stocks in the United States, which weighed on global oil prices for most of the month", the cartel's March report read.

While compliance from some participants has been patchy, Saudi Arabia has made significant cuts, with production down 4.5 percent since late 2016, despite a slight increase in March to 9.98 million bpd. RSI is also in the overbought zone so sellers could take over crude oil price action soon. These per-barrel prices are more than $2.00 higher than this time last week. And in the United States, both production and inventories are surging.

With demand expected to rise by 340,000 bpd in 2018, that would leave increasing amounts of USA oil for export or storage.

Opec said its members kept production below target for the third straight month in March, although it noted that Russian Federation, which is part of an output restraint deal, again fell well short of its pledged cut.

  • Leroy Wright