OPEC figures show oil output cuts exceed pledge in March

The group committed past year to cut about 1.2 million barrels of oil a day.

The difference in price between medium-heavy sour Dubai crude and light sweet Brent crude has hit its narrowest spread in almost one and a half years due to bullish prices for Middle East sour crudes following OPEC's decision to cut production made at the end of November.

Thursday's USA missile strikes on Syria only make the extension prospects even more doubtful: CNBC argued that the strikes "drive a wedge between the Sunni nations.what all these countries need is for everyone to cooperate and make sure they uphold these production quotas, and that means Russian Federation as well" - but the strikes could cause them to acknowledge that some nations have been cheating on their quotas and relax their own standards, thus driving production upward.

"The higher the price of oil in the next year, the greater growth there will be of US production, presenting a Catch-22 dilemma for OPEC and the non-OPEC countries working with them", the Citi report said.

Both Brent and West Texas Intermediate oil price benchmarks declined over the course of the first quarter - to below US$52 per barrel for Brent and US$48 per barrel for WTI - but have recently rallied.

Oil prices have also been supported by a deal led by the Organization of the Petroleum Exporting Countries to cut output by 1.8 million barrels per day for the first six months of 2017, to get rid of excess supply. Nearly a dozen major producers in late 2016 agreed to curb their production for the subsequent six months to help bring global storage levels down to five-year averages.

Brent has risen in each of the previous six sessions, while WTI gained for the last five days.

U.S. crude inventories have touched record highs at the U.S. storage hub of Cushing, Oklahoma and in the U.S. Gulf Coast in recent weeks, according to U.S. government data. Rising concerns about North Korea and Syria may depress oil demand, he said. Another shutdown at Libya's largest field, Sharara, also kept oil off the market.

"As China saw the flows from OPEC countries reduce, it turned to the US for oil in February, buying up more than 8 million barrels from American producers, or nearly four times the volume that it purchased in January".

The price of oil may not reflect this just yet, as Brent crude futures are struggling to recover its losses for the year to date and break above $55 a barrel. "This market should be going higher".

  • Zachary Reyes