Saudi Arabia says will 'do whatever it takes' to balance oil market
- Author: Zachary Reyes May 23, 2017,
May 23, 2017, 8:52
Brent was 69 cents higher, or 1.4 percent, at $50.91 a barrel by 12:07 p.m. EDT (1607 GMT) after hitting a high of $51.16.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.66 per barrel, up 23 cents, or 0.5 percent from the day before.
Global benchmark, Brent crude was up 34 cents at $49.44 a barrel, having recovered from a session low of $48.65.
OPEC on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage USA shale drillers to pump more, hampering OPEC efforts to clear a glut and support prices by cutting its output.
As OPEC and its allies curbed supply, production in the United States, which is not part of the agreement, has risen to the highest level since August 2015 as drillers pump more from shale fields. Aramco had previously maintained supplies to important Asian customers.
The bullish inventories report, came a day after crude prices dropped 1%, after EIA raised its near-term outlook for USA oil production and revised down its projections for oil prices.
"We saw the biggest draw in (US) inventories for the year last week with stockpiles down more than 5 million barrels, and it looks like Opec's production cut is finally biting", said Greg McKenna, chief market strategist at brokerage AxiTrader.
Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June. "U.S. tight crude output is expected to rise rapidly and increase by 600,000 bpd in 2017", OPEC said, using anther term for shale.
A source also told Reuters that seven million barrels is roughly two days' worth of oil imports into Japan, the world's fourth biggest importer.
"That is exactly what we got yesterday as the report showed falling stocks of oil and fuel combined with lower imports", he said.
U.S. West Texas Intermediate futures rocketed back above $47 a barrel and global benchmark Brent topped $50 after the Energy Information Administration reported a much larger drop in the nation's crude stockpiles and a strong rebound in gasoline demand. Traders said the victory of Emmanuel Macron in the French presidential election against far-right Marine Le Pen also supported oil prices as it raised hopes of a more stable European economy.
Essentially, what we are looking at is an overall drawdown in crude oil over the last couple of weeks, but it's just being converted to gasoline.