OPEC members show higher compliance to bring down oil stocks

"Rising oil output in the US remains the predominant bearish factor for prices despite growing anticipation that OPEC will extend a self-imposed cap on its oil production in the upcoming May meeting", Abhishek Kumar, senior energy analyst at Interfax Energy Global Gas Analytics said recently.

Commercial crude inventories declined by 1 million barrels last week, after falling 2.2 million barrels the previous week, the Energy Department reported Wednesday.

Analysts said they expected crude oil inventories to have fallen by around 1.5 million barrels last week.

U.S. West Texas Intermediate (WTI) crude futures had risen 31 cents, or 0.61 percent, to $50.75 a barrel.

On Wednesday, the Organization of the Petroleum Exporting Countries' Secretary-General Mohammad Barkindo called on all non-OPEC producers who aren't part of the output-cut agreement to join the pact, according to a news report from Platts.

A number of key OPEC members including top exporter Saudi Arabia support extending their supply cut into the second half of 2017 if all participating producers, including Russian Federation and other non-OPEC countries, agree, OPEC sources have told Reuters.

On the Atlantic Coast, home to the New York Harbor-delivered NYMEX RBOB futures contract, gasoline stocks fell 1.276 million barrels, but still sit at a 5 million barrel surplus to the five-year average for this time of year.

The oil market has been caught in a tug-of-war, with OPEC production cuts supporting prices while signs of rising US production have pressured crude on concerns about a glut.

"They drop production, we add production, and so at end of the day it's ugly", said Robert Yawger, energy futures strategist at Mizuho Americas.

Benchmark Brent crude futures were down four U.S. cents at $55,32 at 6.49am GMT. Crude inventories fell by 2.2 million barrels.

Crude oil futures were lower Tuesday despite expectations that U.S. stockpiles dropped last week.

"The market sentiment appears to be that the increases in USA shale production outweighs the OPEC action and the market is keeping the loss we had yesterday", he said.

$60 barrel prices would allow for additional investment in the global energy sector, without allowing the United States' shale producers too much additional financial leverage to undo the effects of the output cuts.

The EIA inventories data recorded a draw in inventories of 1.0 million barrels for the latest week which was slightly lower than consensus forecasts of a 1.2 million decline.

Refinery crude runs rose by 241,000 barrels per day, EIA data showed, with a sharp increase in Gulf Coast refining activity.

The compliance rate with the agreement among OPEC members and some non-members, including Russian Federation, "has been impressive", the International Energy Agency (IEA) said in its monthly oil market report, giving a lift to oil prices.

While more OPEC members are seen ready to extend output cuts, U.S. crude stockpiles dropped from a record.

  • Zachary Reyes