OPEC says oil deal bearing fruit, but US pumping more

Gains in crude oil prices are making US shale oil recover as operators respond to the improved market conditions and total growth is forecast at 485,000 barrels per day worldwide, against a decline of 790,000 bpd previous year.

"I wouldn't be surprised to see a bit of book squaring going on now, ahead of the US inventory data which is due on Thursday morning Asia time", he said, also noting that current prices have attracted shale oil producers in the past.

In its monthly report, OPEC said on Wednesday the forecast for United States supply was revised upward by 200,000 barrels, or an additional 540,000 barrels a day.

That would also be the highest annual barrel-a-day figure on record, based on EIA records dating as far back as 1859.

Oil production in Russian Federation was adjusted to 11.15 mln barrels per day in March 2017, 60,000 barrels per day lower than January and February, the OPEC said.

That effort has pushed oil prices above $50 a barrel in recent months, breathing life into US oil patches like the Permian Basin. Earlier in the day, OPEC released promising reports that showed that production dropped more than initially expected last month. In its monthly report on Wednesday, OPEC also boosted estimates for rival supplies as shale drillers emerge from the industry's two-year slump.

Meanwhile, the markets have observed a sluggish pace in the part of the Organization of the Petroleum Exporting Countries and their deal between its members and a number of non-OPEC countries to stabilize oil prices through massive production cuts.

The production by OPEC itself, which accounts for about a third of the world's output, fell by 153,000 barrels per day to 31.93 mb/d, according to secondary sources cited in the report.

The government's Energy Information Administration (EIA) said on Tuesday U.S. 2018 crude output would rise to 9.9 million bpd, from 9.22 million bpd this year.

Of the total rise, 540,000 barrels per day would be produced by the USA, a higher level than previously predicted. Though only a temporary booster, the bombing of Syria by the United States also helped push crude oil higher.

"U.S. tight crude output is expected to rise quickly and increase 335 tb/d for the overall of 2017", the report said, as the main component of USA oil output - tight oil - is forecast to grow by at least 0.34 million bpd in 2017.

Gasoline supplies fell 2.97 million barrels, while inventories of distillate fuel, a category that includes diesel and heating oil, slipped 2.15 million barrels.

The production cut agreed a year ago was from levels as assessed by the secondary sources.

FGE too cautioned that much of the current data is related to maintenance shutdowns.

  • Leroy Wright