Oil prices down as White House proposes selling US oil reserves
- Author: Zachary Reyes May 24, 2017,
May 24, 2017, 11:10
Members of the Organization of the Petroleum Exporting Countries and other producers led by Russian Federation agreed previous year to cut oil production by around 1.8 million barrels per day (bpd) mainly to tackle bloated crude inventories and support higher prices.
Kuwaiti Oil Minister Issam Almarzooq said some nations still aren't on board for a nine-month extension but there's a preliminary agreement on a six-month deal, to be reviewed in November.
Last December, OPEC, Russia and other major producers agreed to curb production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market and push prices to $60 per barrel.
Rising production from non-OPEC and some OPEC countries like Libya and Nigeria not included in the agreement is overwhelming cut backs made by Saudi Arabia, Russia and Middle East producers, all set against a backdrop of lacklustre demand growth as vehicle economy improves mitigating the "benefit" of rising auto sales to demand.
Suhail Mohamed Faraj Mazrouei said Tuesday he was optimistic and looking forward to a great meeting of OPEC in Vienna amid good compliance with the oil curtailment deal.
But this Thursday's frenzy could be even fiercer than usual as Opec-watchers say there's a potential surprise in store.
"Coming to the India-OPEC dialogue, it is crucial for us as we import about 86% of our crude, 70% of natural gas, 95% of cooking gas from the OPEC countries", he said.
The U.S. strategic petroleum reserves (SPR), the world's biggest, now stand around 688 million barrels, a week's worth of global oil demand.
Brent crude ended a run of four days of consecutive gains to trade 21 cents lower at $53.66 per barrel at 1142 GMT.
That would put about 74,000 bpd of additional oil into the market, a fraction of current US production of 9.3 million bpd.
Reportedly, a nine-month extension is under consideration, with Iraq - an OPEC member that has been hostile towards production curbs - apparently open to the idea.
Output cuts by OPEC and other producers have just started to bring down supply.
The U.S. has more leeway to release the SPR crude as its own production has surged 49 percent over the past five years.
Kuwait's oil minister, Essam al-Marzouq, said, "We agree on the need to do whatever is necessary to restore balance to the oil market".