OPEC calls for 'collective efforts' to counter U.S. oil boom

The producer group and other major suppliers including Russian Federation agreed past year to cut their collective production by about 1.8 million barrels a day for the first half of 2017 in an effort to reduce bloated global stockpiles and re-balance the market.

OPEC on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage us shale drillers to pump more, hampering the producer group's efforts to clear a glut and support prices by cutting output.

Brent crude futures, the global benchmark for oil prices, were at $49.60 per barrel at 0045 GMT on Tuesday, up 26 cents, or 0.5 percent, from their last close.

West Texas Intermediate crude oil traded up 1.6% at $46.94 a barrel after weekly US Energy Information Administration inventory data showed a bigger drawdown than expected.

Oil Storage Tanks at Cushing, OKOil held gains before government data forecast to show USA crude stockpiles fell for a fifth week, further reducing an inventory surplus.

As a result, United States crude oil production surpassed 9 million barrels of oil a day in February which is 500,000 barrels of oil a day higher than the low seen in September 2016.

WTI crude oil prices dropped to the level of $43.76 per barrel, the level not seen since mid-November 2016, on resurgence of bearish factors that seems to have hindered the Opec's efforts to support world oil markets.

International Brent crude futures were at $50.46 a barrel at 4.38am GMT on Thursday, up 24c, or 0.5%, from their last close.

Saudi Arabia's energy minister, Khalid Al-Falih, said on Monday that he expected production cuts to be extended to cover all of 2017 and maybe even into 2018.

BMI said that "continued output growth. particularly in the US" would cap price upside gains from the supply cuts, adding that it expected average 2017 prices of $57 per barrel for Brent and of $53.75 a barrel for WTI.

OPEC will meet on May 25 in Vienna to determine whether to extend its production cut deal.

"Chief among (the) oil market's worries is that the renewed rise in USA oil production is reducing the speed at which the supply surplus is being eroded", Fawad Razaqzada, market analyst at Forex.com, said in a note.

There were also underlying concerns surrounding the increase in output in Nigeria and Libya, especially as these two countries do not have an OPEC-imposed output limit.

  • Zachary Reyes