Oil steadies, but rattled by concern about OPEC's clout
- Author: Zachary Reyes May 10, 2017,
May 10, 2017, 3:39
A statement by Saudi energy minister on extension of oil cut agreement will be good news Nigeria, PREMIUM TIMES can report.
Saudi Arabia has begun cutting oil exports in addition to cutting oil production, according to new April shipping figures released by ClipperData.
Oil prices rose on Monday on a growing conviction that an OPEC-led production cut initially scheduled to end in June would be extended to cover all of 2017. The group seems well positioned to continue with its attempts to eliminate a global supply overhang which has depressed prices to less than half their 2014 high.
Even though OPEC has stuck to its pledge to cut production, US output has risen by more than 10 percent since mid-2016 to 9.3 million barrels per day, boosted by the shale sector and close to the output of Russian Federation and Saudi Arabia.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.46 per barrel, down from an intra-day high of $46.66 and also little changed from their last settlement.
Earlier, Russia and Saudi Arabia spoke in support of extending the current cuts past their June 30 expiration into 2018, and Kuwaiti Energy Minister Essam al-Marzouq also said there "is nearly consensus about the importance of extending the agreement for at least six months", adding that his country supports it.
Despite the optimistic rhetoric, overall sentiment remained weak and WTI June futures dipped back below the $46.00 p/b level early in USA trading with July Brent futures declining to below $49.00 after failing to regain $50.00 earlier in the session.
"Oil may have seen the worst of the selloff for now, as the market turns its attention to the Opec meeting at the end of the month", said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
"This surge in US oil production is important as it risks offsetting the impact of continued high OPEC compliance which reached 110 percent in April", Goldman said.
The power center has shifted to the United States shale oil producers. "Drilling activity in the US continued to pick up last week with the rig count climbing for the 16th straight to week to 703".
Another closely-watched data point is the monthly U.S. Energy Information Administration short-term outlook due Tuesday, said Vivek Dhar, a commodities strategist at the Commonwealth Bank of Australia.
Analysts attributed the oil slump to high USA commercial inventories, which now stand at 528 million barrels, close to their historical high.