Oil stable Friday on expectations of extended OPEC-led production cut
Petroleumworld 05 15 2017
Oil prices were stable on Friday as traders expected OPEC-led production cuts to extend beyond the middle of this year, and as U.S. crude inventories fell to their lowest levels since February.
Brent crude futures, the international benchmark for oil prices, were at $50.82 per barrel at 0120 GMT on Friday, up 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $47.89 per barrel, up 6 cents from the last settlement.
"Crude prices could be poised for recovery," U.S. investment bank Jefferies said in a note.
"Net length (in open crude oil futures positions) is at its lowest level since November 2016, which could support a significant price rally if OPEC does extend production cuts," Jefferies added.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year.
OPEC and the other participating producers are scheduled to meet on May 25 in Vienna, Austria, to decide whether to extend the cuts and, potentially, agree a deeper reduction.
Jefferies said it expected an extension.
The bank also said that a fall by 5.3 million barrels in U.S. crude inventories C-STK-T-EIA this week to 522.5 million barrels was "providing some fundamental support for prices".
Based on the lower U.S. inventories and the expectation of an extended production cut, this week has the market stabilise, including a recovery of Brent back above $50 per barrel, following steep price falls last week.
Despite this, analysts warned that markets remained well supplied.
Norwegian consultancy Rystad Energy said that "U.S. oil production has gained significant momentum" and that there was "limited downside risk in the short-term."
Rystad said that "U.S. Lower 48 (all states excluding Alaska and Hawaii) oil production is set to expand by an additional 390,000 bpd from May 2017 to December 2017 assuming a WTI price of $50 per barrel."
U.S. crude oil production C-OUT-T-EIA has already risen by over 10 percent since its mid-2016 trough, to more than 9.3 million bpd, close to levels of top producers Russia and Saudi Arabia.
Story by Henning Gloystein; Editing by Joseph Radford from Reuters.
reuters.com May 12, 2017
We invite all our readers to share with us
their views and comments about this article.
Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels