After oil drop, some OPEC delegates question if supply cut deal enough

NEW YORK, June 9 - Oil prices rose about 1 percent on Friday, bouncing a bit from steep falls earlier in the week as a declaration of force majeure in Nigeria prompted some buying in a market still anxious about the global crude glut.

July West Texas Intermediate crude rose 31 cents, or 0.7%, to $45.95 a barrel on the New York Mercantile Exchange-trading between a low of $45.27 and a high of $46.18. It puts Brent around 12 percent below its opening level on May 25, when an OPEC-led pledge to cut production was extended into 2018.

Jim Cramer, host of CNBC's Mad Money, recently speculated that the only thing that could give crude the boost it needs is when deep-water oil wells start to run dry (his argument stems from the fact that these wells can produce 20 times more oil than a single shale prospect and are pumping away, keeping worldwide inventory close to capacity).

"Crude oil prices are testing lows last seen in 4Q16. despite last month's 9-month extension to the 1.8 million bpd cuts", USA bank Jefferies said, pointing to the United States as the main pressure on prices.

Oil's 5 percent tumble Wednesday, the biggest slide since March, followed government data that showed US crude and fuel stockpiles unexpectedly soaring at a time of year when they normally decline.

U.S. Energy Information Administration (EIA) data this week showed a surprise build in commercial crude oil stocks to 513.2 million barrels this week C-STK-T-EIA . The data also revealed increases in gasoline and heating oil supplies, along with weak demand for petroleum-product inventories, although crude production in the lower 48 states posted its first weekly decline of the year.

Thomson Reuters Eikon shipping figures show at least 25 supertankers sitting in the Strait of Malacca and the Singapore Strait, holding unsold fuel.

Those are similar amounts to May and April, indicating that even in Asia, with its strong demand growth, traders are struggling to clear inventories. As I mentioned, comparing to the first quarter we've come down a little bit as a matter of our production rate, so we are running at about 561,000 bpd.

Libya's 270,000-bpd Sharara oilfield has reopened after a workers' protest and should return to normal production within three days, the National Oil Corp said on Friday.

  • Zachary Reyes