Saudi Arabia To Trim Oil Exports To US To Force Inventories Lower
- Author: Zachary Reyes May 27, 2017,
May 27, 2017, 5:19
Opec and non-members led by Russian Federation decided yesterday to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
But one problem, according to analysts, is that Saudi Arabia and Russian Federation initially deepened the glut by ramping up their exports just before the November agreement. Brent crude, the global standard, rose 3 cents to $51.49 a barrel in London.
West Texas Intermediate crude fell US$0.31 to US$48.59 per barrel in NY, after sinking 4.8 percent in the previous session, while Brent crude dropped US$0.27 to US$51.19 a barrel in London.
OPEC and other major producers, including Russian Federation, will roll over their six-month deal to remove 1.8 million barrels a day from the market through March 2018.
The State Statistic Committee figures suggest that the first quarter saw oil production fall 9.9 per cent, while gas production rose 0.9 per cent in the country. "With soft demand figures globally, that hope is fading nightly", Dutch bank ING said.
As OPEC extended its oil production cut, the cartel has retained its position as a "swing producer" in the global market, a leading oil analyst said Friday.
Oil prices had risen sharply in the 2 1/2 weeks before the OPEC meeting, as an extension of the current production cuts became increasingly clear.
"Next year, we actually think USA oil production won't increase as much because they've increased so much this year", Yergin said.
OIL ROLLER-COASTER Oil prices initially recovered some ground after tumbling 5 percent on Thursday, before falling back.
With U.S. output rising steadily and OPEC and its allies potentially ramping up production in 2018 to regain lost market share, many traders already expect another price slump.
Russian Federation maintains its oil-price outlook at $50 to $60 a barrel on average for this year, Novak said.
A lack of data meant that the latest United Kingdom election news, and the continued reaction to yesterday's OPEC meeting, dominated Friday's early trading.
U.S. energy firms added oil rigs for a record 19 weeks in a row but the pace of additions has slowed with only two added this week, and the monthly total added was the lowest since October, according to Baker Hughes data. "The Dow Jones also closed higher, however underperformed relative to peers, with UnitedHealth leading risers on Trump healthcare reform hopes, while Chevron and Goldman Sachs contributed most losses after recent strength".
In the meeting at OPEC headquarters in Vienna, energy ministers from OPEC and non-OPEC countries agreed to extend the oil production cut until March next year.
The Saudis insist that the same level of cuts will bring us within the five year average by year's end.
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