Saudi oil minister says output cuts may be extended if necessary

Saudi oil minister says output cuts may be extended if necessary

Saudi oil minister says output cuts may be extended if necessary

USA crude prices will climb to at least $64 a barrel in the third quarter as the surplus begins to disperse, Francisco Blanch, head of commodities research at Bank of America, said in a report on March 10.

April West Texas Intermediate crude CLJ7, +0.35% rose 20 cents, or 0.4%, to $48.96 a barrel on the New York Mercantile Exchange. That reassurance may stem a further slide in crude for now, but may not be enough to put the more the $4/barrel knocked out of Brent and WTI in a rout that began on March 7. The rebound has been cautious, with investors looking for evidence that OPEC-led supply cuts will bring a sustained drawdown in stockpiles since OPEC and non-OPEC producers began cutting back output on January 1. OPEC has broadly complied with its commitment to cut 1.2 million bpd in the first half of the year, but investors have been unnerved as stocks have kept climbing.

Last week, futures prices plummeted more than 8 percent, their biggest declines since early November, as US crude inventories surged much more than expected to a record high.

The analysts surveyed by S&P Global Platts - the leading independent commodities and energy data provider - had expected crude stocks to go up some 3.5 million barrels.

Reports continue to expect that USA output will be rising, with the EIA seeing April production up by 109,000 bpd, while OPEC continues to stick to the tune "we'll extend the deal if need be", with only hints on what's brewing in the Middle East, as always.

OPEC countries are complying with a landmark deal to reduce a worldwide glut in oil, but it will take some time yet before the oil market feels the full impact of the reduction in output and prices stabilise, the International Energy Agency said on Wednesday.

While Opec compliance to output cuts is nearing 100 per cent, relative non-compliance of non-Opec coupled with steadily climbing United States production is making the long side wary.

USA crude slid on Tuesday to its lowest since November. Following last week's decline, the existing stock of the most widely used petroleum product is now 1.4% lower than the year-earlier level and is in the upper half of the average range.

Oil prices were advancing on Friday morning in a relatively calm trade, as a weaker dollar was helping oil futures set the stage for a weekly gain after last week's sharp drop.

Distillate: Distillate fuel supplies (including diesel and heating oil) went down by 4.23 million barrels last week, again significantly trumping analysts' expectations for a 1.8 million-barrels fall.

Saudi Energy Minister Khalid al-Falih said in an interview Wednesday that OPEC has a "strong willingness" to extend the deal beyond the initial six-months when members meet in late May. Canada remained the top destination for USA crude oil exports in 2016, receiving 301,000 bpd, 263,000 bpd greater than the Netherlands, the second largest destination.

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