Saudi cuts lift oil prices

"Time will correct for this statistical glitch that we saw last week", he said and he expects the oil inventory drawdowns to pick up pace in the next three to four months, which will stabilize the oil markets.

United States oil production continues to expand, production from non-OPEC sources is rising and even though global demand is picking up with economic growth better prospects for more to come, there's no sign of that mopping up the overhang any time soon.

State oil company Saudi Aramco will also supply full volumes of heavy crude for a third straight month, despite cutting supplies for this grade earlier this year, one of the sources said.

Oil extended gains as Saudi Arabia and Russian Federation sought to reassure investors that coordinated production cuts by Organization of Petroleum Exporting Countries (Opec) and its partners are draining a global glut.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July recently traded up 0.4% at $46.25 a barrel in the Globex electronic session while August Brent crude on London's ICE Futures exchange rose 0.4% to $48.47.

Investors have become more skeptical that efforts by the Organization of the. Oil prices settled to their lowest level in about a month Wednesday after data showed that United States crude stockpiles unexpectedly climbed for the first time in nine weeks.

The EIA says United States crude production is forecast at 10.01 million barrels a day for 2018, up 0.4% from the previous outlook. "But with the commencement of production at forcados, the nation is believed to be exporting commercial oil to the market unlike in the past". The number of drilling rigs in the USA rose by eight to 741 rigs last week, according to Baker Hughes Inc., as shale producers continued to pump more.

Falih said the data was a "local phenomenon". But they said the move might prove fleeting. This industry has benefited from a long period of oil price stability and low volatility between 2011 and 2014, not only to expand but also to generate strong productivity gains that have allowed U.S. producers to reduce considerably their costs of production. In 2016, Saudi Arabia's total petroleum and natural gas hydrocarbon production rose by 3%. Because any lowering of oil prices at this stage would make Riyadh's objective of getting a better value out of the intended Aramco IPO still hard.

  • Leroy Wright