Russian Federation to reach record high oil output in 2017 amid cuts

Crude oil futures slid for a second session on Thursday, moving away from a one-month high touched briefly in the last session as rising USA production stoked worries about global oversupply.

An extended agreement should lead to bigger a draw down of global stock inventories, which fell in OECD nations in March as demand outstripped supply, but remain well above historical averages.

The combination of factors could keep a lid on oil prices, which have risen in the past six months after a three-year slump.

"Although the oil market will likely tighten throughout the year, overall non-Opec production, not just in..."

According to state media in Russian Federation, the country's oil minister has upped the ante on how much the country will cut out of its production levels through June.

The market has been oversupplied for three years and members of the Organization of the Petroleum Exporting Countries as well as some non-OPEC producers have agreed to slash output to rein in the glut.

The Paris-based group, which advises oil-importing countries, expects US output to climb by 680,000 barrels a day this year, higher than its previous forecast.

The forecast comes after years of excess supply, which last year prompted major oil producers to agree to cuts in output.

"It can be argued confidently that the market is already very close to balance", the agency said in its monthly report. Iran, which is exempt from the cuts, caused concerns among analysts and OPEC members that its aspirations to grow production would nullify OPEC cuts. Still, data showed an unexpected drop in overall USA crude inventories, which fell in the week by 2.2 million barrels as imports declined by 717,000 barrels a day.

"New data shows weaker-than-expected growth in a number of countries including Russia, India, several Middle Eastern countries, Korea and the U.S., where demand has stalled in recent months", it said.

In parallel, USA supply growth is now seen reaching 680,000 b/d by year-end versus when compared with output levels for end-2016, more than the IEA had been expecting, and firmer oil prices would only provide further encouragement to American outfits to raise their levels of output.

Global benchmark Brent futures added 13 cents or 0.25% to trade at $55.99 a barrel on the ICE Futures Exchange in London. Parties to the deal meet to consider the terms next month and it's widely expected the arrangement will be extended for another six months.

Analysts struggling to distill conflicting developments into a credible oil price prediction for the rest of the year appeared to have the IEA's sympathy.

  • Zachary Reyes